Getting the Most From Your Credit Card Rewards
Reward credit cards are becoming more popular these days with people demanding more bang for their buck when they spend money. No matter what the expense is, dog shampoo or groceries, it is a good idea to look into a rewarded credit card. Here are a few tips on how to determine if you can benefit from credit card rewards.
Sometimes, you simply don't need a rewards card. It might seem like a great idea but in reality, there isn't a need if you find yourself with sporadic purchases or if you never made a credit card purchase in your life. In order to make this decision, there are a few things in your life you might consider taking a closer look.
Here are a few aspects of your financial spending habits to consider to see if you can benefit from a rewarded credit card. The first is to see if you have decent credit. If so you can move down the line and look at your spending habits. If you frequently visit hotels or airlines, you may be a good candidate. Also, if you spend a lot of money on gas or groceries that's also a good indicator a rewards credit card is a good fit for you.
It sounds intuitive and for good reason. Without a good credit score, there is little that you are able to do these days. Large purchases such as cars, toys or houses require the buyer to undergo a credit check. It's not fun, but it's necessary. The same goes for a rewards credit card. It's a credit card and like any other credit card, the company dispersing it needs to know you can handle a monthly bill.
This refers to transferring money from a card you already have. Be aware of the rate you're paying, whether the card has an introductory APR offer and the rate of pay after it expires. Like with all credit cards, always be aware of fees of any kind. Credit card companies offer incentives to transfer a balance so keep an eye out for these offers.
Rewards credit cards tend to have higher APRs than non-rewards cards. The APR is essentially the interest rate you will pay on your balance that is not paid off by the end of each month. That being said, if you are going to have a rewards credit card it is best to make sure you can pay off the balance each month otherwise the interest you will pay on the balance you carry over may negate any benefit you can gain from the rewards.
There are several different kinds of rewards offered by credit card companies. The two most common are rewards are cash back or travel miles. It's important to discern whether you will benefit more from travel miles or extra cashback at the end of each month. If you're a frequent flyer, getting a travel reward card can be a smart move as you can recoup some of your travel expenses and apply the rewards to future travel.
Cashback is the most common reward that is beneficial for pretty much everyone. Different credit cards will offer different cashback rates on various categories of purchases. For instance, with card X you may get 1% back on groceries, 2% back on online purchases, and 3% back on travel purchases. Make sure you shop around and find the best reward scenario given where you spend the most money.
Travel reward cards can really be beneficial if you travel a lot for work or even fun. Travel reward cards are issued by the major credit card companies as well as specific airlines too. If you fly a lot for work and always use the same airline getting their travel reward card could save you a chunk of change. Even if you don't fly for work, having a travel reward card is a great way to save up for a vacation as you collect reward miles with most purchases.
The potential annual fee that may come with a card is something to be wary of. Paying an annual fee isn't necessarily a bad thing and you might be better off with a card that has one. Take out a calculator, estimate the amount you will spend on the card, calculate the value of the rewards you will get, and then subtract the annual fee. For the card to even be considered this number should be positive.
If you're planning on traveling out of the country, particularly overseas and in countries with different currencies travel rewards cards can be helpful. Normal credit cards will usually only work in your resident country but some travel cards work abroad in foreign countries. This can make life much easier since you won't have to convert your native currency into the foreign currency, the credit card company will do that automatically.
There are other perks of having a credit card with specific companies beyond the rewards. Some major credit card companies work out deals to get cardholders' early access to tickets for specific events. See what credit card companies are offering, you may find something cool to take advantage of!
Saving money is never a bad idea, especially in today's world. Having a credit card with some time of reward tied to the purchases made can only benefit the cardholder in the long run. So, the question is, what reward card are you going to use?