How to Choose the Right Rewards Credit Card | Get Financial Freedom Tips | Transform Your Financial Future


Wednesday, April 6, 2011

How to Choose the Right Rewards Credit Card

If you are going to have a credit card then you might as well make it a rewards credit card. This credit card gives you something back every time that you use the card. As long as you choose wisely then this means that you can be getting something for nothing – a rare thing in this world indeed! But how do you choose the right rewards credit card so it helps you save money instead of costing you?

The following tips will help you select the rewards credit card that is right for you :

Choose a rewards credit card that does not require an annual fee. Although there are some high quality fee-based cards out there the average consumer is going to benefit most from a credit card that offers rewards without charging you annually.

How to Choose the Right Rewards Credit Card
Consider choosing a cash back rewards credit card. There are many different types of rewards credit cards including airline cards and gas rebate cards. However the average consumer will get the most benefit from a cash rewards credit card that provides actual cash back for the purchases made on the card.

Select a card that is offering a promotional deal. Many rewards credit cards offer promotional deals that give you a large amount of “points” or cash back when you first sign up for the card or after the first time you’ve used the card. Look for a deal like that because it means you’ll benefit from the card immediately.

Make sure that you understand the way that the rewards work on any card that you choose. As you look at different rewards credit cards you will see that there are many different ways of awarding points. For example, some cards offer 0.25% cash back for purchases up to the first $1500 spent annually then they increase to .5% until you’ve spent $3000 and then they go up to 1% back after that. Some people find this much more difficult to understand than a card that offers a simple and straightforward percent back on all purchases. When reviewing cards, choose ones that make the most sense to you to look at more closely.

Choose a card that gives you money back on the things you buy most. For example if you spend a lot of money on travel then look for a rewards credit card that offers a higher rate back for travel expenditures. If you frequently shop online then select a credit card that gives you access to great discounts when using the card’s online shopping tool. Note that some credit cards offer higher rates for seasonal categories so if you’re someone who travels in summer and donates to charity around Christmas then you will want a card like that.

Select a card that makes it easy to redeem your rewards. You should make sure that there are no expiration dates or earning caps on the rewards that you can get. You should make sure that you can redeem rewards when you’ve accrued a reasonable amount (for example, that you can cash in when you have $20 in rewards instead of waiting until you have $100). You may want to select a cash back rewards card that offers other options for redeeming (like giving the rewards to charity or choosing gift cards instead of cash). Review the rules for redeeming rewards before you choose the card.

Review the APR and fees for the card. The only way that you’re going to really make a rewards card worth it is if you don’t carry a balance on the card. That way you aren’t spending anything in interest to earn those rewards. That said, there may be occasions when you do need to carry a balance or do a balance transfer from another card so make sure that you choose a rewards card that has a fair APR and low transaction fees.

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