RateTart Forum

In terms of getting the best rate, I think it's worth switching deals to benefit from introductory rates. There's no tie in, and no cost of switching. If you've got a good credit rating, switching every quarter is not likely to harm your credit rating as long as you make sure you close your old accounts down. It’s the work of moments to apply for another card....

Personally, I doubt that the end is nigh for cash back credit card offers, and all other forms of reward cards for that matter.

The credit card companies are making record profits. The annual reports on their websites make happy reading for shareholders. Revenue from retailers, where credit card companies make a percentage fee per transaction, is consistently strong. As is the revenue from customers (they make money from charges, fees and interest payments). And they have just introduced their most effective method ever of combating fraud through Chip & Pin.

It's a good business to be in, and unsurprisingly there's lots of competition. So cash back offers and other rewards will continue to be offered to entice customers.

The only fly in the ointment for credit card companies is that some of the fees they charge customers (for missed payments etc) have recently come under scrutiny.

Is it worthwhile for the card companies to try to recoup their lost revenue by reintroducing an annual fee?

It’s easy to change your credit card. The cost for the customer to switch to another card is nothing, and the hassle factor is very small. Reintroducing an annual fee is likely to cause highly profitable customers to leave in droves.

Since the FSA suggested capping some credit card charges, the card companies seem to have fallen over themselves to cap their fees voluntarily. I doubt they're losing much money by reducing their charge for each missed payments to "only" £12 a time.

I think that they fear more draconian action if they’re not seen to cooperate. And perhaps what they really fear isn’t opposition to the charges for late payments.

I'm speculating, of course, but there's been a lot of noise recently about the high rates of interest charged by some door to door loan companies. In some cases, these are not that far off the interest rates on some credit cards. I'd have thought that capping interest rates on credit cards would dent profits far more than capping charges. More people regularly pay interest, and interest payments are for bigger amounts.

Personally, I think the noise about reintroducing annual fees is a shot across the bows. The last thing credit card companies want is to have to risk their profits by hemorrhaging profitable customers. And even if they do reintroduce fees, there will probably be get out clauses that are easy to meet – just like the bank charges First Direct have introduced.

But I could be wrong. Does anyone else have a point of view?

Hope this helps. Good luck with your cash back deals.