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Ride Hailing Credit Cards: Good or Bad Idea?

Uber and Lyft will soon both offer co-branded credit cards, but should you call for one?

A city commuter uses a smartphone ride hailing app, which you may soon be able to connect to a ride haling credit card featured an article last month that introduced the world to a new concept in credit: ride-hailing credit cards.

These new cards are co-branded with top ride-hailing services like Uber and Lyft. It’s rumored that both companies are in the process of developing credit cards that offer hailing incentives. For their version, Uber partnered with Barclaycard, a major worldwide credit issuer. Experts believe the new Uber card would likely be a Visa® credit card.

What would rewards look like on ride hailing credit cards?

The article doesn’t list the specific rewards that each card will offer; however, the point structure could be similar to other travel rewards credit cards. You essentially might earn frequent rider miles, like frequent flier miles. That would mean free Uber or Lyft rides for active cardholders.

What you should look for before getting a ride hailing card

Based on what we know of frequent flier mile credit cards, ride-hailing mile programs could work in the same way. If they do, these are the features that will determine how useful these cards could be:

  1. What purchases earn points?
    Restrictive cards would only allow you to earn miles or point on ride hailing from that company. Non-restrictive would mean you earn on every transaction you make with that card.
  2. Is there a minimum when you redeem miles?
    Many frequent flier cards require you use 25,000 miles at minimum to purchase a ticket. Miles have a cash value of around one cent, so using flier miles on anything less than a $250 actually wastes money. If ride hailing credit cards have a similar system, only longer rides would be worth using your miles up.
  3. Are there any blackouts?
    Travel reward credit cards are notorious for blackout restrictions. This means you can only use your miles at certain times or for certain seats on an airline. Ride hailing companies might adopt something similar. So, for instance, you might not be able to use your miles during rush hour or for a big event. That would make these cards less useful.

Reward credit cards are only rewarding if you earn instead of owe

Even if these new riding-hailing credit cards offer rewards on all purchases with no minimum mileage or blackouts, people should still be cautious. Consolidated Credit’s president Gary Herman warns that reward programs often lead to problems like purchase acceleration.

“Creditors design reward programs to incentivize customers to use a card as much as possible,” Herman says. “As a result, cardholders can experience purchase acceleration, where you effectively make charges for the purpose of earning more points. It’s a recipe for debt disaster if you don’t practice moderation and manage the debt carefully.”

Herman points out that many times, people quickly offset the rewards they earn with interest charges. Unless you pay off transactions in-full at the end of each billing cycle, high-interest charges quickly eat up the value of rewards earned.

“If you manage the debt by paying it off in full, you make purchases interest-free,” Herman explains. “This maximizes the value of the rewards you earn, meaning you could save money overall and lower your transportation costs. Otherwise, this is just another vehicle that lets debt hitch a ride on your budget.”

Having trouble eliminating debt from your existing reward credit cards? We can help.

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