Understanding Rewards Credit Cards

Are Rewards Credit Cards Right for You?

Everyone likes getting something for nothing, so it’s no surprise that the popularity of rewards credit cards has skyrocketed over the past few years. The question is, are you really getting the rewards from rewards credit cards for free, or are you paying for the privilege without realizing it? If you’re thinking about using rewards credit cards, you first need to figure out whether they’re the right credit cards for you.

Do the Perks Outweigh the Price?

The first thing you need to understand about rewards credit cards is that those rewards you’re getting aren’t free. The companies that offer rewards credit cards charge higher interest rates to make up for the money they lose by giving you those rewards.

For example, if you have good credit you could probably get a low-interest credit card with an interest rate of less than five percent. However, a rewards credit card may charge you well over ten percent in interest costs.

If you carry a balance on your credit card, the rewards you are getting don’t pay for the money you’re losing in high interest payments. For you, low interest credit cards would make more sense than rewards credit cards. However, if you pay your balance in full each month, you’re not paying a penny in interest and rewards credit cards could pay off for you.

Check the Terms of the Card

If you are one of the people who pays their balance in full each month, make sure that you check the credit card terms and conditions before applying for any rewards credit cards. Some rewards credit cards will only issue rewards on the balance you carry. Since you don’t carry a balance, the card would be of no benefit to you.

Also make sure there are no annual fees involved when applying for rewards credit cards. If you only get $25 in rewards each year but the annual fee is $49, you’re losing money in the long run.

By making sure rewards credit cards are for you and understanding the terms and conditions of rewards credit cards, you can benefit greatly from the perks these cards have to offer.

If rewards credit cards are for you, check out this rewards credit cards website.

If you carry a balance on your credit cards, you will want to opt for the low APR interest credit cards available at this website.


If you're aiming for frequent flier miles, keep these points in mind:

1) Each airline pairs up with a certain credit card issuer for accumulating miles on their card. Some independent cards, on the other hand, allow you to convert points into miles on several airlines.

2) Usually airline credit cards have an annual fee. Consider how many miles you'll typically add up in a year and then decide if it's worth the fee.

3) Some miles cards give you 1 mile per $1 spent on the card. Some it's 1 mile per $2 spent. Sometimes it's 2 miles per $1 spent. Sometimes other ratios. And sometimes there are exclusions or special deals ("double points", etc.).

4) As usual, keep in mind the cost of interest and carrying a balance from month to month.


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