Since their inception, payday loans have been a cheaper option than credit cards for dealing with those temporary shocks that life throws at your budget. Now there’s even less reason to resort to using credit cards when you’re on the spot – rewards programs are being cut back, thanks to the current economy.
Denied!
But you're better off using payday loans
Kathy Chu reports in USA Today that American Express has grounded their domestic companion airline tickets program for Platinum and Centurion cardholders. Allegedly, customers weren’t using the program, says card spokeswoman Desiree Fish. JPMorgan Chase is tightening the screws. Even Discover is forcing customers to cough up their cash rewards if they don’t use their account for a while or miss a couple of payments.
This is the reason why many people even bother with credit cards – the rewards. Cash, airline tickets and other special discounts have been the bait of choice since the 1980s. Whatever it takes for credit card companies to get their hands on your money more often. Payday loans don’t have that kind of flash, but they are mercifully cheaper because they are not a gateway to compound interest and the true debt spiral.
Short-sighted?
According to Bankrate.com senior analyst Greg McBride, these cuts are not taking the best road toward long-term success. “You’re basically kicking customers to the front porch of competitors,” he says. Even though it could save companies like American Express as much as $1 billion in 2009.
And here’s what’s happening at Chase:
Consumers who got the Freedom credit card after Nov. 4 are receiving a 1% cash reward on most purchases and a 3% reward on promotional items, which regularly change. Before, the card provided a 3% automatic cash back on the categories in which consumers spent the most.
Not surprisingly, Chase spokeswoman Tanya Madison claims the rewards are “just as valuable” as before. Right. “Use it or lose it” is the message across the credit card industry. There will be fewer rewards, points will be lost and more people will be kicking themselves for not taking payday loans to pay for those doctor’s bills instead of applying for a new credit card.
Good article…
Cutting off the rewards program on credit cards is getting many credit card users discouraged. I have to say, they came up with one of the best ideas to attract consumers into using their product. I’m sure they will be losing a lot business over this. Fortunately, at least people are still able to obtain payday loans and cash advances for their short term financial needs without having to worry about their loan policy changing every so often.