Credit Cards Blog

Finance Blogs » Credit Cards » More credit cards come with cash

More credit cards come with cash

By Marcie Geffner ·
Friday, June 17, 2011
Posted: 3 pm ET

Not many companies actually pay people to use their services. But credit card issuers are so eager -- or desperate -- to sign up new customers that they're willing to do exactly that.

In fact, upfront cash inducements are becoming the "enticement of choice" on new credit card offers, according to Mintel Comperemedia, a direct marketing and research firm in Chicago.

Incentives of all kinds are so popular that 59 percent of new credit card offers in the first four months of 2011 included some kind of sweetener, the company said in a statement. That was up sharply from 30 percent of offers that included incentives during the first four months of 2007.

Airline miles and rewards points were still the most popular incentives, used as a lure on 25 percent of the new credit card offers during the recent period, but additional cash was a close second at 23 percent. In the first four months of 2007, only 1 percent of new credit card offers included an additional cash incentive.

Moreover, in the most recent period, cash was offered as an incentive not only on cash-back cards, but also mileage cards and cards that didn't offer rewards.

In some cases, the cash incentive is so attractive -- as much as $300 -- that consumers might apply for a card just to get the incentive with no serious intention of using the card in the long term, according to Andrew Davidson, a senior vice president at Mintel Comperemedia.

"The challenge for issuers will be getting these incentive-driven switchers to change their spending behavior and become loyal cardholders," Davidson said.

Cash incentives are certainly an attractive inducement, but consumers should always consider carefully before accepting a new credit card offer. Read the terms of the card agreement and be aware of the annual fee, interest rate and other fine print. If you don't need another credit card in your wallet, don't sign up for one just to collect the upfront cash incentive.

Follow me on Twitter: @marciegeff

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
June 27, 2011 at 7:48 am

hey guy?