Credit Cards – Understanding Reward Cards

Everywhere you look it seems like another credit card company is offering a new reward program for using their credit card. They make it sound so good and such a great deal. But are the rewards really worth using the credit card? Let's take a look at some of the different rewards that these credit card companies are offering.

You may be thinking that having one of the many different credit cards that are offering various rewards are a lot of fun. The truth is, you need to be careful and you need to be smart. Not all reward cards are worth having. You may think it is fun to use your credit card to gain free nights stay at a nice hotel, or fly free to a great destination, but you may have paid twice the price for these things in the long run if you're not careful.

Avoid reward credit cards with high interest rates. In many cases a reward type card will carry a higher interest rate than your standard credit card. The higher interest charges can easily offset any possible reward. You'll need to do some checking to see if it is worth it or not. Of course, if you're someone who pays off his or her balance every month, this will never be a problem for you.

Likewise, keep an eye out for any reward credit cards that have a high annual fee. This may offset the value of any reward you would receive. By looking at the fine print you could save yourself a lot of money spent on fees and costs.

Cash Back

This is a popular type of reward credit card going around. Many of the top credit card companies offer cash back reward programs on your purchases. Generally the cash back is 1%, which comes out to $10 for every $1,000 spent. Be sure to read all of the fine print on these types of cards to see if there is a maximum limit you can receive.

Points

Another popular reward credit card is one that gives you so many points for every purchase with the card. You can then redeem your points for items such as a store gift certificate, or other items. Does the card have a limit on the number of points you can accumulate? Or do they have a time limit for saving up your points? If so, then this may not be a very good deal in the long run. Take your time and shop around for the best deal.

Airline Rewards

Frequent flyer programs have been around for a number of years. Some are based on points, while others are based on actual flying miles. You will receive one point, or mile, for every dollar you spend using your card. The problem with most of these type rewards is that it takes 25,000 points in order to redeem them. This makes it very difficult for most people to achieve the rewards from these types of credit cards. If you are a big user of your credit card, then this may be a perfect program for you.

Finding a good reward credit card can take a little work on your part. You may just find the perfect one that fits your needs and lifestyle. Or, you may find that the standard credit cards are more suited for needs. Be sure to read the fine print and shop around.