Choosing a rewards credit card

Jul 31, 2012

Choosing a rewards credit card definitely makes sense if you pay more often with your credit card than with actual cash and more importantly, you do not mind risking steep interest charges if you don`t pay your bill on time for whatever reason. However, there are different kinds of rewards that credit cards offer today. It would be a good idea if you were to know all your options first. This will help you more accurately determine which reward program is most suitable for your needs.

Credit cards that offer air miles as a reward are understandably most popular with frequent travelers. Your credit card purchases are converted into air miles and in time, you may rack up enough air miles to enjoy free flights to your destination of choice. With this type of credit card, keep in mind that the conversion rate for air miles from dollars spent varies from one card to another. Participating airline companies are also likely to vary.

Another great choice for travelers would be credit cards that offer fuel refills as the primary reward. Similar to the above type, the conversion rate for how much gas refill you get for how much you have spent would depend on your credit card`s terms and conditions. Likewise, participating fuel companies would vary.

If you prefer a broader selection of rewards from which to choose, you may probably enjoy using your credit card more if it had a point-based reward system instead. With this type, every dollar you spend using your credit card is equivalent to a certain number of reward points. And no, before you even ask it, there is no way that you will get to enjoy a $1 to 1 reward point ratio! That is mathematically impossible for any financial institution to offer. In any case, the conversion rate also varies from card to card.

Another variable would be the selection range you enjoy with your reward program. Some banks, for instance, concentrate on offering consumer products only. These include, but are not limited to, refrigerators, cell phones, laptops, designer bags and shoes. In other cases, services such as spa treatments, fine dining courses for two, or even a variety of workshops may also be included. Finally, if you are lucky, both products and services and everything else you wish for may be included. It could be a stay for two in a luxurious city hotel or even tickets to world-class shows.

Cash back cards, on the other hand, offer no limits when it comes to the rewards you get to enjoy because you “earn” your cash back instead. This is made possible by rebates, which may be offered if you purchase a particular product for a particular amount. However, this type of arrangement rarely means literally getting your cash back. More often than not, the amount of rebate you earn would be used to further reduce your credit card balance.

Other Factors to Consider When Choosing a Rewards Credit Card

Naturally, there are other factors to take into account. Knowing what they are will ensure that you get the most out of your money when shopping with your credit card.

- How much are you being charged for interest? Is it equal to or higher than industry standards?

- How much will you have to pay for late fines and other penalties?

- What will your credit limit be?

If you keep in mind the <a href=”“>money saving money</a> tips above, there is a very good chance that you will enjoy shopping for lower rates overall. So, do your research and get those rewards.

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