Editorial Policy

2 credit card marketing tactics that make me squeamish

Kristin McGrath

October 18, 2013

Because I work for a card comparison site, friends and family often assume I’m a credit card proponent. But that’s not always accurate. Because I learn about debt and its consequences all day every day, I accept that certain people should steer clear of plastic. Plus, editing stories about deciphering sales pitches, researching rewards programs and reading the fine print has taught me that applying for a card is a major financial decision that should only be made after much debate.

In fact, knowing as much as I do about credit makes me even more squeamish when I see over-the-top credit card marketing tactics. Here are two I’ve been subjected to recently — and why I find them so troubling.

The “captive audience” method: On a recent flight, I was awakened from a nap by the words “Earn 500 bonus miles!” Was it one of those credit-related dreams I often have? No. It was the flight attendant hawking the airline’s rewards card. The five-minute-long sales pitch emphasized the card’s benefits (free drinks, free checked bags) and dangled the extra reward of 500 bonus miles for those who signed up during the flight (on top of the 40,000-mile sign-up bonus that’s available to everyone). The attendant then walked up the aisle with applications, stopping every few rows to ask who was interested. As we prepared for landing, she added another quick plug for the card just after asking us to make sure our seatbacks were in the upright position. This happened on all four legs of my round trip, meaning that I (and everyone else on similar itineraries) was bombarded with the credit pitch eight times in one weekend.

Why it bothers me:

  • The audience of this pitch was about as captive as it gets — 30,000 feet in the air and strapped in. There was no opportunity to compare this airline’s sign-up bonus (which I will admit was pretty good) with that of other cards or to read online reviews. Plus, I just don’t think it’s fair to invite people to make a major financial decision when they’ve essentially endured sleep deprivation torture for the past three hours, thanks to the screaming babies and a lack of legroom.
  • The pitch had a time constraint. The 500 bonus miles were promised only to those who filled out an application before exiting the plane. These “for a limited time” sales tactics can lead to hasty decisions. Plus, 500 miles is pretty worthless, considering you need about 24,000 miles to make a round trip.

The “spend more to earn more” method: The online streaming service I use to watch TV and movies has been constantly playing commercials for a card that offers extra points in certain categories. The scenarios differ, but the commercials involve someone spending extra — fighting a friend for the lunch check, taking a date to the most expensive restaurants in town or buying concert tickets for their daughter and her friends. When an incredulous observer asks how they can afford to be so generous, the hero, with a knowing smile, mentions that their credit card is allowing them to earn double points for those purchases.

Why it bothers me:

  • Rewards cards should be used for earning a little extra on planned purchases. Encouraging cardholders to go out of their way to earn points can lead to overspending — and interest charges that will likely cancel out those rewards if the balance isn’t paid in full when the bill arrives.
  • “Double points” aren’t really worth that much. It depends on how you redeem your rewards, but, in general, a point is worth about a cent. So those double points are worth about 2 cents per dollar. This can really work for you when you’re buying something planned and expensive — such as a large appliance you’ve saved up for. But throwing down your card for extra meals and tickets? You’re earning a couple cents while adding to your balance.

Although sales pitches for credit cards can be problematic, the cards behind them can be both useful credit-building tools and a way to earn rewards on what you’d normally spend money on. If your interest is piqued by a tempting sales pitch, ask yourself these questions before signing up:

  • Is this actually good for my credit? If you are already struggling with debt, don’t sign up. If you’re planning on applying for a major loan, don’t sign up — the hard pull on your credit report will ding your score. Credit considerations should come before rewards considerations. In fact, fixing your credit first will actually help you qualify for better cards with lucrative rewards, as Brian Kelly, founder of ThePointsGuy.com points out in a Q&A on travel blog Nomadic Matt.
  • Is this card actually good for me? Consider how much you actually fly the airline offering the card — or how much you actually spend in bonus categories. Also consider whether you’ll carry a balance. If so, you’re better off going for a low-interest card than a high-rewards one.
  • What is this card trying to sell? And what’s it trying to hide? As personal finance blog The Simple Dollar points out, mailed credit card offers will often draw your eye to what the card issuer wants to you focus on — a giant “0%,” for example, if it’s a balance transfer card. What you need to search for is the larger number (in smaller print) — the interest rate the card will revert to once the intro period ends.
  • What else is out there? If an airline card advertisement boasts a huge sign-up bonus, check out what other airline cards offer. If an advertisement emphasizes the card’s low interest rate, try to find a card with a lower one. In a guest post for Man Vs. Debt, blogger and author Adam Hagerman, explains how he paid an extra $750 by failing to check other stores when shopping for suits. The same principle applies to card benefits.

Intriguing sales pitches are useful in that they notify you about benefits you might want. The key is using those sales pitches as a challenge to find something better — not as an excuse to sign up on the spot.