Selecting a Credit Card: Rewards or No Rewards?

Before obtaining a credit card, it is wise to check all available options and select a credit card that fits your needs best. While there are many types of credit cards available (standard, secured, rewards, etc.), this article discusses the pros and cons of credit cards with and without rewards.

Are Rewards Credit Cards Worth It?

Benefits of Rewards Credit Cards

A rewards credit card is a credit card that gives you redeemable points each time you use it. Rewards credit cards are great for people who pay their credit card balance monthly, as reward credit cards typically have a higher interest rate.

Each time you use a rewards credit card to make a purchase, you get points depending on how much you have spent. A typical rate is one or two points for every dollar you spend. You can redeem these points for rewards such as earning airline miles, gift cards, cashback, etc.

Drawbacks of Rewards Credit Cards

While credit cards that offer rewards are valuable, they can have their drawbacks too. Some rewards credit cards have a high annual fee that may not suit the average credit card holder. It is true that many credit cards with a high annual fee come with higher and better rewards, but you may not want to spend too much on annual fees.

Rewards credit cards can be a waste of money if you get rewards that are not useful to you. For example, if traveling isn’t something you enjoy but your credit card offers you rewards in the form of travel miles, you may never redeem them. In such a scenario, you would be better off to look for a rewards credit card that offers a cash back option instead.

Non-Rewards Credit Cards

A standard credit card (non-rewards) is not only simple to use, but it may be the best option if you are new to using credit cards. A standard credit card can be the best choice for you as it may not involve any additional fees. Choose a credit card with the minimum interest rate and no annual fee. A standard credit card is the best option if you wouldn’t use a rewards credit card enough to rack up extra points.

Get a Credit Card With First Alliance Credit Union 

Credit card rewards or no rewards is ultimately your decision. Remember, a good rewards credit card should help you gain a financial advantage, not lose money in excessive annual fees. To make sure that you are taking full advantage of your credit card, ensure that you spend the right amount of money through your credit card. If you do opt-in for a rewards credit card make sure to redeem all your rewards on time and do your best to make sure that your balance is paid monthly.

Questions about choosing a credit card? Ask us!