Just about every credit card issuer is offering rewards in one form or another these days. The issue is not whether you should be getting a reward credit card or not, but what type of a reward card you should be getting.
The marketplace has become very confusing; card companies are offering cash back, points, or other incentives to get you to sign-up with them. And on top of that, you also have to consider the annual fees and the interest rates. That can make it really difficult for you to decide what’s right for you. Here are a few tips that you should keep in mind when you are choosing a reward credit card.
Align Rewards with Your Interests
Reward credit cards can offer many types of rewards. These cards allow you to collect points when you purchase merchandise, airline miles, or gift cards. It is best to choose a reward card that aligns best with your interests and goals.
If your budget is tight, you should choose a card that offers points towards the basics like shopping or filling your gas tank. If you are a traveler, an airline miles reward card might be the best option for you. Avoid selecting a reward that you won’t even be using in the future. Also, you should avoid rewards that force you into paying more money such as redeeming gift cards from other stores.
Don’t Forget About Cash Back
Though cash is a reward that is available, most people do not opt for it as you have to spend a lot in order to accumulate a small amount cash. Most providers feel that non-cash rewards are much more valuable than the cash back, because by accumulating reward points you can get something tangible that seems more valuable to many.
Compare Reward Offers with Others
A huge mistake that is made by some consumers is that they add a credit card to their wallets based on impulse. Instead of giving into your impulses, take a minute and compare the offer or reward terms in front of you with others being offered. This will give you a chance to compare the interest rates and the annual fees, even if these vary depending on your credit score. Be cautious of the cards that have an annual fee. If a particular card is offering you rewards which are much more generous than the others, it may have a much larger annual fee which will lessen the overall benefit of the card.
Dump Less Rewarding Cards
If you have several cards, then the cards with a high-interest rate and annual fees should be the first to go. If you are planning to add a card while dumping the others, look for a card that offers you a competitive rewards program and a nice balance transfer program. These programs usually have a 0% interest rate for a certain period of time and also increase the rewards on balance transfers.
Run Your Spending Through One Card
After you rid yourself of the less rewarding cards and still have a few left, then you should put your purchases on the more beneficial card to maximize its value. A card with great rewards is useless if you do not utilize it.
Know When Your Reward Points Expire
There was a time when reward points did not expire, but many now do. Make sure that you carefully review the fine print of your credit card agreement to see if, and if so, how often, reward points expire.
Keep Track of Changes in Terms
Credit card issuers may sometimes change the terms. When they do make changes, they should notify you. However, be careful to not miss something in the fine print. If you see changes made to the reward points or the percentage of cash back then you should definitely take a minute or two to go through the changes in those terms.
Summary
Most people own credit cards, but many people do not pay attention to the terms of the credit cards. Several credit cards offer spending rewards. Knowing what kind of reward card you should have can be very beneficial. You should know how you can utilize these rewards and make them profitable for yourself.
