In the present time, credit cards have become the most prevalent means of transacting business since they are convenient to carry and are less attractive to common thieves as hard cash used to be. Another plus for the credit cards is the fact that you can keep track of all your purchases as the system records all transactions entered on your identity.
Importance of credit cards
Having noticed the importance of credit cards, most financial institutions and even most stores and retail outlets have tried to encourage the use of credit cards as a means of doing business. As much as the stores and other sellers prefer the use of credit cards, there are also instances of defaults or late payments as far as credit cards are concerns. As a means to solving these problems, most credit cards have specific incentives in the form of rewards for well performing credit cards. This is done by monitoring orderly credit card users and introducing specific bonuses or even reduced transfer rates for holders of such credit cards.
Objectives of credit card rewards
The main reason behind the introduction of credit card rewards is to inspire the holder of the card to clear his debts in timely fashion. It is also meant to attract persons who do not use the same cards to start doing so as it makes doing business much easier. Reducing the load of hard cash carried by individuals has lots of advantages for persons as well as business establishments and even governments. The use of credit cards helps governments in tracing any cases of money laundering or other unusual transactions by individuals.
By giving incentives in the forms of rewards all the players in this game are supposed to gain by the simplified way of making and receiving payments. Think of a retail store that sells to about one thousand customers daily. If all the customers were to buy goods and services and pay for the same in cash, the store would have so much in raw cash making it an easy target for armed thug. On the other hand, if the transactions were to be conducted using credit cards, there would certainly be no chance for ran armed robber to get any money hence the preference of the use of credit cards. On judging from this perspective, most institutions have come to opt for the use of credit cards and even gone the extra mile by introducing incentives for potential customers such as credit card rewards and low transaction rates to lure them towards the service.