The real meaning of credit card perks

'Perk' is one of those lovely words; filled with the promise you'll be in receipt of lovely things - and free of charge (it's derived from the Middle English perquisite, meaning to receive compensation for a service, a reward or gratuity). If you're lucky, you'll get perks with your job. If you're canny, you'll get perks with your credit card.

Credit card perks

Credit card perks come in a number of guises and credit card issuers have always used them to tempt people to sign on the dotted line in the hope customers will either fail to claim the perks or - if they do claim - will mis-manage their card resulting in fees and interest that easily eclipse the value of the perk, this making money for the issuer. The number of cards offering perks or 'rewards' or 'loyalty schemes' as the issuers prefer to call them have reduced dramatically over the past few years, but there's still enough out there offering a variety of perks tha should pique a savvy consumer's interest.

Have you been turned down? You could still get a credit card

What is a perk?

When considering credit cards with perks, it's best to first make clear in your mind what a perk actually is. A few issuers have TV ads running at the moment that flag up 'complete protection from fraud or identity theft' as one of the card's perks. But under current law, it's the issuers of plastic cards - rather than individual cardholders - that bear most of the costs of fraudulent use anyway. All issuers have 24-hour emergency telephone numbers and dedicated teams to handle fraudulent transactions, so this is your legal right as a consumer rather than a perk offered by the card companies.

An example of a bone fide perk is reward points. These are accumulated each time you use the card and, once you've hit a specific number of points, can be exchanged for anything ranging from a discount on a Vauxhall car to air travel to a football shirt autographed by Pelé.

Flying high?

Arguably the first tangible perk offered by credit card companies was the Airmiles scheme (not to be confused with a frequent flyer scheme), where spending on the card accumulated Airmiles that, once a certain level had been reached, could be exchanged for a flight the further you wanted to go in real miles, the more Airmiles you needed to get there.

The Lloyds TSB Airmiles Duo card (15.9 per cent APR) account is good for couples. It offers two cards, so each person collects Airmiles independently but they're credited to the same account and so accumulate twice as fast at the rate of one Airmile per £50 spent on the card (or one Airmile per £25 spent outside the UK). According to Airmiles.co.uk, the world is split into zones, with a destination in Zone 1 (most UK destinations, Jersey, Dublin, Amsterdam, et al) costing 750 Airmiles; most of the destinations in 'developed' Europe are in Zone 2 and cost 1,500 Airmiles. 'Emerging Europe is mainly Zone 3 (2,500 Airmiles), all the way up to Zone 7 (Buenos Aires, Sao Paulo, Sydney) and will cost 10,000 Airmiles.

Credit cards that offer rewards

25 January 2008 © Moneyextra.com

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