Bank of America this week introduced a new credit card aimed at rewarding customers who paid on time and who paid more than the minimum amount due each month.

The BankAmericard Better Balance Rewards card offers holders $25 in cash rewards per quarter, provided they don’t have any late payments and pay more than the minimum required payment. Cardholders who have another account at the bank, like a savings or checking account, receive an additional $5 per quarter, for up to $120 per year.

The rewards can be automatically applied to the balance or deposited in another account.

The bank says the card is aimed at customers who carry a balance on their cards, although you can pay the balance in full each month and collect the rewards. But if you are a heavy card user who pays in full each month, you’d probably do better with another type of cash-back rewards card. Several offer at least 1 percent cash back on purchases, and often more, in specific categories, like gas or groceries.

The new rewards card has no annual fee and is being offered with no interest rate for 12 months. After that, the interest rate jumps to 11.99 percent to 21.99 percent, depending on your credit profile when you apply.

Curtis Arnold, founder of CardRatings.com, said other cards have tried variations on the theme of financially rewarding responsible card behavior. Discover’s Motiva card, for instance, offers 5 percent of your interest charges as a cash-back reward automatically, when you pay on time. And the Citi Forward card for college students offers a reduction in the card’s interest rate when holders make a purchase, pay on time and stay within their credit limit.

“At the end of the day,”  Mr. Arnold said, “rewards work to motivate cardholder behavior, and enticing someone to pay on time is a good thing.”

Do you think a card that rewards you for paying on time makes sense?

Article source: http://bucks.blogs.nytimes.com/2013/03/06/new-card-offers-cash-back-for-paying-on-time/?partner=rss&emc=rss