How “Rewarding” are Rewards Programs?
Rewards Credit Cards are not a new concept, but making charitable donations or tithing with them might be to some donors. Nearly everyone has heard of the potential tangible gains that are available to eligible consumers who regularly utilize these financial tools, but the in-tangible benefits often go overlooked. Initially, rewards program cards were created to add to the already alluring idea of “credit” issued to a consumer with the option to buy now and pay later, emphasized with the bonus to receive rewards for their spending. These rewards include but are not limited to; airline miles, store credit and even cash back. However, the less noticeable and possibly most “rewarding” aspect of using cards like these are using them to make charitable donations or religious tithing.
Socially and Financially Rewarding?
According to creditcards.com, 57% of consumers report that cash back is the most important credit card feature. With bonuses for new card sign-ups and the ability to earn up to 5% cash back in some instances, the savings/earning can be substantial. Other rewards are available as well, that depending upon the user, can be even more attractive. Imagine being able to enrich the lives of individuals that you donate hard earned dollars to, and also receive tangible “thank you’s” for doing so. To some, this might sound too good to be true and would lead us to question, who is footing the bill for these rewards?
Who Pays for Them?
As everyone knows, nothing comes free and rewards cards are no exception. So is the reward worth the cost? Yes. These cards’ rewards are paid for by several different means; however, they are too numerous and too convoluted to list all of them, so we’ll cover the biggest ones. The first is merchant fees. This means that a merchant accepting these cards pays a higher interchange rate in order to accept them at the point of a sale. This is the largest portion of the cost. They are also backed by other consumer interest rates incurred while using these credit cards and carrying a balance. Additionally, most of these cards carry an annual fee that is assessed to everyone who has them. Those facts aside, the issuing bank still classifies rewards cards as a bank expense and still ends up paying a significant portion of the bonuses paid to consumers and donors. In short, these cards can be used to make a financial and spiritual impact on both the charitable organization chosen, and the donor. Who wouldn’t want to reap those rewards?