The Skinny on Rewards Credit Cards
The basic concept of credit cards with rewards is that they give something back to cardholders in exchange for their loyalty. Many credit rewards cards are offered in the market today such as cash back, frequent flyer miles or merchandise, groceries or gas, etc.
The good news is that would-be cardholders are in for a treat. Competitions between cards companies are very stiff which results in bigger and better rewards credit cards offer to attract new customers and maintain the old ones. Although all rewards cards sounds great at first glance, it is best not take everything at face value. The most important thing to do is to an extensive amount of research on each offer before you actually sign on for it. To guide you through the selection process, consider the following tips:
Tip 1: If you plan on carrying balances every month, you will not earn any rewards. One thing you should remember is that credit rewards cards have higher interest rates than average cards. If you have outstanding balance from month to month, you are not going to earn anything from the rewards after you pay off the interest.
Tip 2: Pay close attention to every rewards offers and you are likely to come across phrases such as “cash backs up to 1%”, what does that mean? It means that you will earn less than 1% on cash back and it will not be until you achieved high levels of spending will you earn more than 1%.
Tip 3: It is important to determine the type of rewards programs you need otherwise you might not be maximizing the benefits you will get from rewards credit cards. Additionally, make sure that the reward you are aiming for are actually worth your money. Why spend $12,000 on your card per year just to earn a $50 gift certificate?
Tip 4: Frequent Flyer miles are best for people who make frequent purchases on their cards. If you do not charge much on your card, it may take years before you will qualify for a free flight. If you are an occasional spender but still want to get rewards credit cards, look for those that offer rewards at low level of spending.
Tip 5: Gas rewards cards are great especially since fuel prices are increasing. However, know that you will only earn points or get cash backs if you purchased fuel at real gas stations. Using your cards on wholesale clubs, supermarkets or other locations may not qualify you for rewards.
Tip 6: A large majority of credit cards with rewards have limits. For this reason, make sure that you read the fine print to find out what your card’s maximum earnings for rewards are. In addition to rewards limits, some cards enforce expiration dates on rewards points. If you do not use your points on a specified period of time, you cannot redeem them anymore.
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