Credit Cards Do Have Their Rewards
By Tisha Kulak
This is a guest post by Tisha Kulak. Tisha is a writer for CreditorWeb.com, where she writes about secured credit cards, rewards programs and personal finance.
While many people may opt for a rewards program credit card, many others do not even know their current card may also have rewards benefits. Cardholders who aren’t fully aware of all of the benefits their credit card offers certainly can be missing out on some money saving opportunities.
Decisions, Decisions
There is a large variety of rewards programs available to consumers today. Choosing a card can be overwhelming, especially when it comes to the programs benefits. A good place to start is by considering your lifestyle.
For instance, if you travel frequently for business or pleasure, a card that offers frequent flier bonus rewards would be something to strongly consider. If you commute to work or find yourself filling up at the gas pump often, a gas rewards card might be the most beneficial to your financial situation.
Cold-Hard Cash is Nice
Some rewards cards deal with cash rebates. Typically, for every purchase on your card, you will, in return, get a percentage of your spent cash back. Many times companies will offer you a choice for receiving your cash back benefits. You can request a check for the amount of cash you have earned back, you can purchase items especially selected for the promotion. Or you can have the cash bonus amount placed back onto your account, thereby reducing your debt.
Get Some Perspective on Your Credit Card
The ways you earn rewards points will vary by program but in order to maintain good financial practices, it is essential that you think of a credit card more like you would a debit card – meaning you should never charge more on the card than you can afford to pay back each month. You should never spend more in purchases just to reap a larger percentage of rewards. The inflation of your interest percentage will wipe out any rewards you receive.
Skip the Hoopla
When selecting a rewards card, it is more important to analyze the facts of the card more than it is important to focus on the bells and whistles of the rewards program. Avoid cards with annual fees and high interest rates, regardless of what the reward program offers. Pay close attention to the remaining interest rate after any special introductory offers expire. While you may start out with a 0% rate in the beginning, you may end up with an 14% rate sooner than you anticipate.
Utilizing a rewards card to benefit your life can be an important financial step. However, it is most important to remember that using any credit card responsibly is a financial obligation.
I love my rewards card, but I just don’t spend enough to really rack up the points. That’s definitely a good thing, but it’s easy to see how you can get sucked down the rewards points rabbit hole. I think it’s important to consider credit card rewards as an unexpected bonus instead of trying to max them out. $2,000 in debt is so not worth a $25 Outback gift card.
Sara, you’re right about being cautious. Honestly, it is very easy to miss a payment by mistake (although I’ve never done it and hope never to either), or pay less than the full balance off each month. You truly have to be organized and dedicated to make sure you don’t screw yourself over. Just one month of interest for us would totally negate a year’s worth of rewards, which is why I’m very diligent about paying off the full balance each month.
They way I do it works like a charm. I have two main credit cards; CapitalOne Platinum & Chase Freedom. Now the CapitalOne is 6.49% Variable APR that I use for major emergencies that I would need to pay over time, like car repair.
My Chase thom is another story, I don’t use cash anymore unless I have to (like arco), so I use my credit card for everything I buy, from food to Bills. Every pay check I pay off the balace of the card, so I have not once seen interest (being over 10% I wouldnt want to either). The chase freedom seperates your purchases into categories, and will give you 3% cash back on your top three and 1% on the rest. Now I don’t spend much on the card, so I really only make about $40 or less in rewards per month. But if you don’t redeem your rewards till $200, then you get back $250.
Reward cards are great, if you can control them.
“Honestly, it is very easy to miss a payment by mistake (although I’ve never done it and hope never to either), or pay less than the full balance off each month. ”
Actually, it is not easy to miss a payment by mistake. You get a bill sufficient amount of time in advance to send your check. How is opening a bill, looking at balance column (not payment due column) and signing a check for the full amount difficult? Don’t see a bill in the mail – you know you made purchases last month, so call. You can also use online payment.
Better yet, there is such as thing as “automatic payment of the full balance”. Then you will never miss a payment – the credit card issuer will just take it off from your bank account on the due date. Chase, AmEx, most other banks offer it. If a bank doesn’t – switch to another one. Chase is actually one of the better ones in this regards – you can sign up for automatic payment right on their website. With most other banks you need to fax or send in the form.
“Variable APR that I use for major emergencies that I would need to pay over time, like car repair.”
I wouldn’t count car repair as a major emergency. This is what savings account should be for. 7% is significantly higher than what banks pay. Major emergencies are medical bills. Or legal.
“Avoid cards with annual fees and high interest rates, regardless of what the reward program offers”
Agree about annual fees, but why do you care about the interest rate if you pay your balance in full. It could be 99.99% for all I care. I am not paying it.
yeah same here on the car, i just used that as an example for when i was between jobs and had to repair my car, not to mention my card is still promo 0 percent… def better to pay from savings… if you have any