Rewards programs still expanding for good credit consumers

While many consumers have made considerable efforts to reduce debt and more conscientiously handle their credit card debt and spending in recent months, more lenders are nowexpanding the value of their rewards offers in an effort to attract new borrowers.

Consumers who have strong credit ratings have likely seen the value of the rewards offers they receive in their mailboxes increase significantly over the past few months, as more of the nation's top credit card lenders compete to draw in new and more creditworthy borrowers, according to a report from the Baltimore Sun. One tactic many of these lenders are taking is to grant consumers a significant amount of rewards up-front – usually the equivalent of if they had spent thousands of dollars on their card – and then doubling that total once certain spending thresholds are reached.

Recent research by the marketing firm Synovate found that the value of these offers has been on the rise even as the number of rewards mailings sent to consumers has slipped between June and September, the report said. However, that may be because these most generous offers are only being made available to consumers who have FICO credit scores of between 750 and 850 – the best consumers can achieve. Many of these offers may also be available to consumers who have ratings of between 700 and 749, but they will also likely pay higher interest rates on the accounts than those whose credit ratings are top-notch.

Of course, these cards generally have higher interest rates than do accounts that come without rewards programs attached, and any consumers signing up for one may find that there is also an annual fee attached, the report said. For this reason, it may be a good idea for consumers to carefully review any lending agreements they may receive to make sure that an account will work for them. For example, if the size of their annual fee will be larger than the amount of rewards they would earn on their account given their normal spending habits, that account might end up costing them money every year.

In addition, it makes sense to check and make sure opening the account will be a good idea simply given the borrower's current financial situation.