Credit cardholders can now advance not only cash but reward points for instant redemption of gifts.
The Consumer Council has studied such relatively innovative "advance bonus point schemes" as operated by four credit card issuing banks.
To some consumers, such scheme offers the flexibility of enabling them to redeem gifts even though they have not earned sufficient reward points needed.
But, like cash advance, the bonus points they advanced have to be settled in full within a specified repayment period. Failing that, they are liable to make good any bonus points outstanding.
Consumers should therefore pay attention to the terms and conditions stated on the redemption form.
In the Council survey, it was found that all the 4 credit card issuing banks set a maximum allowable limit for advance bonus points which can be as high as threefold the credit limit or $500,000.
Consumers are required to accumulate and repay the bonus points before a specific date which is usually 6 months to 2 years. Otherwise, all the banks would levy a fee on the outstanding balance.
One would charge cardholders a sum of money equivalent to the value of the gift or cash coupon redeemed.
The 3 others would levy a fee calculated in proportion to the outstanding balance, one of them would charge an additional handling fee.
Therefore, consumers are advised to carefully consider whether they can achieve the spending target within the specified repayment period.
Consumers will do well to check their monthly statements for information on the outstanding balance of bonus points as well as the due repayment date.
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