Bank cards can prove to be an effective weapon against inflation this winter, through the reward they offer when they are used. In practice, by making an electronic payment, in a physical or online store, their owner gets back a percentage of the value of the transaction, which in the form of points or euros, is credited to the account of the respective reward program.
He can then proceed to redeem them at any of the bank’s partners, paying less or not at all. That is, his profit is real money, since it reduces his expenses.
The annual benefit
If the card is used intelligently, the annual benefit could even reach 1,000 euros, a not inconsiderable amount. And all one needs to do is to replace cash in their payments with plastic money where possible. Reward rates in most cases involving fixed costs, such as shopping at supermarkets or buying fuel, range between 0.8% and 2%.
However, in other markets, which are basically inelastic, the profit is clearly higher and can even exceed 7% on a permanent basis.
In addition, from time to time banks activate seasonal offers, through which the benefit can even reach 20% or 30% of a purchase. E.g. currently an enhanced reward is offered for purchasing school supplies or products aimed at students to meet the needs of the period, such as technology items, furniture, clothing.
In any case key to maximizing the benefit is the profile of the consumer. The latter must record the expenses and the businesses in which he makes them and find the card that offers the most profit. Alternatively, he can change the companies he chooses for his purchases based on his card’s rewards program.
Crisis offers
Besides, after the outbreak of the energy crisis, enhanced reward offers have been activated for goods that have become significantly more expensive. The most recent example is the doubling of the reward for purchases at all supermarkets with which banking groups cooperate, as part of the basic reward scheme for credit card holders.
The benefit for the next six months will amount to 2%, which is a permanent discount for the customers of the specific banks. Other major credit institutions have previously activated an offer with a 5% bonus on every electricity and natural gas bill payment to any provider.
In this way, a significant part of the increased energy costs was returned, to be redeemed in other markets. Similar offers are expected to be launched in the next period.
Types of programs
In general, reward programs can be distinguished into the following categories:
1. Firstly, to those that offer rewards both to the partners of the bank that has issued the card, and to any other business. In this case, the benefit for trading in partner businesses is up to eight times that of those outside the list. With these programs, the cardholder has a variety of options to redeem their winnings.
2. Second, to those that offer rewards only to the network of partner businesses. And in this case the redemption options are many.
3. Thirdly, to what is connected with co-branded cards. That is, those that have been issued in collaboration with a company or group of companies, in which the purchases offer a reward that can even reach 10%.
In addition, the reward in any other store is configured on a case-by-case basis at 1% – 2% of each transaction. Redemption on the other hand is only done at partner businesses, which are few in number or may even be one, unlike the rewards programs of the aforementioned categories which offer much more options.
So, whether it is beneficial for someone to choose a co-branded card depends on their consumption habits. If the affiliate absorbs a large portion of his expenses, then these types of programs are appropriate. It is noted that cards of this category are available on the market, which are linked to businesses from the supermarket and gas station sectors.
Example
Here’s an example of how an average household can earn €1,000 a year using their cards.
- Spending at the supermarket: 9,600 euros – 2% profit: 192 euros.
- Expenses for motor and heating fuel: 6,000 euros – 1% profit: 60 euros.
- Electricity costs: 3,600 euros – 3% profit: 108 euros.
- Expenses for health insurance and 2 cars: 2,500 euros – 3% profit: 75 euros.
- Clothing expenses: 3,000 euros – 5% profit: 150 euros.
- Spending in restaurants: 2,000 euros – 10% profit: 200 euros.
- Communication costs (mobile, landline): 700 euros – 1% profit: 7 euros.
- Expenses for cruises: 1,150 euros – 5% profit: 58 euros.
- Expenses for travel accommodation: 1,500 euros – Profit 150 euros.
It is noted that the above percentages of profit are actually from an active reward program and concern transactions made in selected companies collaborating with the bank.
