I’ve got a “thing” for Jennifer Garner! There, I said it. She’s insanely beautiful, but she’s the enemy. So is Samuel L. Jackson and anyone else out there pimping big bank’s “Rewards” credit cards.

The cash back cards are now up to 1.5%! That sounds awesome … depending on who you are:

  • Only 42% of cardholders payoff their card each month
  • 8% do enough to payoff their card in 3 years
  • 4-5% only make minimum payments each month

     How do these numbers compare with your institution? You should know!

So consider this, if you spend $1,000 on a 1.5% Cash Back Rewards Card at 14% interest
(Chase has the lowest rate right now with 14.24%-23.24%):

  • You’ll get $150 in rewards!!! Woohoo!!!
  • You’ll also pay them back $153.13 in interest in the first 14 months of paying minimum payments (1% of balance per month).
  • Making minimum payments only, you’ll pay the card company $667 in interest over the 104 months you’ll have the balance.

      In this scenario, you’d need to make fixed payments of $49 per month to break even on your cash back reward.

Not all cards are right for every person. Most of our clients have low rate cards running at about 6.5%-7% APR. Depending on who’s across the desk from you, the low rate cards may be MUCH better than Samuel L Jackson’s 1.5% cash back offer. You have to know what to ask.

The 7 questions to ask before you sell someone a credit card:
1. Do you have bad credit?
Focus on rebuilding credit. Card options are limited. If you can get one, use it, but be disciplined and pay it off each month.

2. Are you a student with questionable income or credit?
Student cards can help you build credit. Use it, but pay it off each month.

3. Is it for a business?
Look for a business card that may offer year-end summaries and rewards.

4. Are you transferring a balance?
Look for balance transfer rates and beware of teaser rates that will jump up on you. Also watch out for balance transfer fees.

5. Is it for a specific big purchase?
Maybe a 0% introductory rate will be good if you are committed to paying it off before the rate jumps up.

6. Do you plan on carrying a balance?
Look for a low interest rate to keep debt from accumulating quickly. Rewards may bite you in the butt.

7. Do you plan to pay it off each month?
A rewards card may make sense for you.

Don’t let your customers get swayed by Samuel L’s pretty face or Jennifer’s cool demeanor (wait … scratch that … reverse it). Make sure you educate them and help them select the right card.

When I was on your side of the desk, I would have considered sharing this info with my peeps, I hope you’ll do the same.

In addition to being a bank and credit union strategic consultant, MarketMatch also has nationally and internationally requested speakers. Contact us to bring our marketing ideas to your institution or next conference.
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