On December 16, 2015 the Federal Reserve made a decision to increase the current Prime Rate by .25%. These changes will affect the current variable APR for Barclaycard Ring cardmembers and may also impact your minimum payment due. See our Prime Rate FAQs blog for additional information about these changes.
Barclaycard Ring Members wish this card had rewards. It’s been mentioned enough so I want to address the issue. I’ll admit, I wish the card had rewards too. The trouble is, we can’t afford the cost of rewards AND an 8% variable APR. I just went to bankrate.com (feel free to go there after reading this blog) and clicked on credit cards. In the upper right section of the page, Bankrate posts the average APR for various credit cards. Low interest cards are listed at 10.69%. Rewards cards are listed at 15.4%. That’s almost 5% more per year for rewards cards across the industry.
Pricing for any product is based on two main factors. The first is what the product costs to make and maintain. The second is what a consumer will pay for it. In my opinion, the reason rewards pricing is higher than low interest pricing has little to do with either factor. Rewards programs are costly to run, and therefore, need to charge a higher APR. Consumers who want rewards cards may not be as sensitive to the price of the product. They are more drawn to the rewards and less interested in what price they pay for their balances. They may assume they won’t pay the interest so are not concerned with the APR. Still, 5% additional interest can eat into rewards pretty quickly.
Ok, so rewards cost more and we can’t afford it with an 8% variable APR. What else? Well, rewards can be complicated. Right now a great many rewards credit cards have tiers, caps, different rates for different types of merchants, different values for various redemption options and on and on. Those things make my head spin, and I think (obsess) about this stuff for a living. Not good. For Barclaycard Ring we really want to create a product that is simple. We feel rewards can complicate matters and could require us to charge a higher APR.
All that said, we are committed to giving our cardmembers value for their purchases. Inside the community we’ll be discussing various ideas that speak to that. We want to start a discussion to see if there is a better way to tackle this. We’ll keep everyone posted on how those conversations unfold.