Groupon Credit Card….Good Idea?
So are you a bargain shopper that never passes up a deal? If so, how would you like to receive rewards in the form of discounts and deals on products and services for every bargain purchase you decide to make? Your wish might come true within the next year. Groupon junkies are the ideal target demographic for co-branded credit cards (i.e. Visa-Groupon credit cards, American Express-LivingSocial credit cards, etc.). But is this concept really a good idea? One research firm seems to think so. In fact they believe banks will see that the benefits of “daily deal” rewards instead of the standard cash back or air miles will greatly outweigh the downsides to these types of co-branded cards.
Greg Flemming, Lightspeed Research spokesman revealed that many daily deal shoppers are the perfect prospects because they already hold some of the credit industry’s top credit cards. A recent phone survey concluded that 1,500 Americans bargain hunt on daily deal sites like Groupon and Living Social and typically earn more than $75,000 per year. However, these same subscribers make sure to stretch their savings and pay off their balances in full every month.
According to Lightspeed’s research, about 34% of Groupon users were interested in a Groupon-branded credit card and 27% of Living Social customers are on board for a card featuring the logo of their favorite deal site. But is this really a good thing for consumers?
The idea of a Groupon AmEx is attractive and may be hard to resist for some Americans. My personal advice is to think twice before considering this credit route — or better yet avoid it completely. Right now these cards don’t even exist but if they suddenly pop up on the credit card radar, you need to remember the pros and cons of this type of card including the high fees and interest rates that may be associated with it.
Co-branded credit cards target low risk borrowers but it can still mean trouble. By offering special rewards to consumers, they will notoriously overspend and buy things they never intended or really needed in the first place. This card is great if most of your shopping is done through daily deal websites, however if not, you’d be better off getting a regular rewards card that rewards you for purchases you make on daily and basic purchases such as gas and grocery purchases.
Remember to be careful and know all the dynamics of co-branded credit cards! You know what they say, if it sounds too good to be true, it probably is. Be smart and think hard about whether or not the rewards are worth the costs. If they aren’t, then you’ve found your answer!