Some credit card issuers offering practical rewards

By Christine Dugas and Sandra Block
USA Today

Credit card rewards programs are shifting from the sublime to the sensible — allowing consumers to use points to pay down mortgages and reduce card interest rates.

Though some rewards programs still target big spenders who might want to use points for private jets and exotic vacations, Citibank, Providian, GMAC and others now offer more practical perks.

"The sizzle of a vacation is nice, but I think from a practicality standpoint, what's there not to like about reducing the balance on your mortgage?" says Rick Gillespie, chief marketing officer for GMAC Mortgage.

Examples of the trend:

• GMAC Mortgage last week said it has teamed with card giant MBNA to issue a new MasterCard that helps homeowners reduce their mortgage balance. Card holders will earn one point for every dollar in purchases charged on the card. Whenever a card holder accumulates 2,500 points, $25 will be credited to the principal on their GMAC mortgage.
• In March, Providian launched Real Rewards, a program that lets card holders use points to temporarily lower their interest rate or pay off late fees, among other traditional perks. Card holders get points for making purchases, paying their bills on time and carrying a balance.