credit cards

Issuers push premium credit cards in 2011

Cash flow

The real darling these days seems to be the cash-back rewards cards. This year, three cash-back cards came off the proverbial factory line, while two issuers -- Discover and Chase -- enhanced their cash-back programs.

"Banks are putting a lot of money behind their cash cards," says Miller. "Just look at TV: BankAmericard has its 1-2-3 ad campaign. Capital One Cash has Jimmy Fallon."

Capital One got the ball rolling in February with its Capital One Journey Student Rewards Credit Card. Students earn 1 percent on all purchases. As a bonus for good behavior, students receive an extra 25 percent every month they pay their bill on time.

The issuer followed up in August with its Capital One Cash card, which offers cardholders 1 percent on all purchases, a 50 percent anniversary bonus on cash earned the previous year and $100 cash back after spending $500 in the first three months.

Bank of America also announced its BankAmericard Cash Rewards card that rewards cardholders up to 3 percent cash back on certain purchases. The deal is sweeter when consumers deposit their rewards into a Bank of America checking or savings account: They get an extra 10 percent more.

"Consumers are no longer interested in complicated rewards for products," says Bill McCracken, CEO of Synergistics Research Corp. "What is foremost in our minds is cash or cash equivalent."

Issuers cater to small biz

Small-business owners also got their fair share of cash-back options this year. Bank of America in May launched a suite of three small-business charge cards -- two of which offered cash-back features.

The bank came back in August with its Cash Rewards for Business MasterCard that offered 1 percent on all purchases, 2 percent on dining, and 3 percent on office supplies, gas and computer services.

That same month, Capital One announced its Business No-Hassle Cash Premier credit card with 2 percent cash back on all purchases, plus a one-time bonus of $100 after spending $1,000 in the first three months.

"Small-business cards don't have the same CARD Act protections as consumer cards, so issuers are rolling out new ones or enhancing existing cards," says John Ulzheimer, president of consumer education at "All the stuff the CARD Act got rid of is still fair game in the small-business world."

The Credit Accountability, Responsibility and Disclosure Act of 2009, or the CARD Act, eliminated very profitable but questionable practices such as retroactive rate increases, unannounced fees and double-cycle billing. The rules, however, don't apply to small-business credit cards.

Last, but not least

Citi also unveiled a new credit card this year that didn't fall neatly into a category. The Citi Simplicity Card came out in July and features no late fees or penalty rate and one interest rate on all transactions -- purchases, cash advances and balance transfers.

The company said the card is in response to consumer surveys that found that 2 in 5 people paid a bill late in the past year. Otherwise, the card has no bells and whistles, just the simple peace of mind that its name implies.


Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

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Cash Back Cards 17.92%  0.01 17.91%
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