How to choose the best rewards credit card
How to choose the best rewards credit card By Amy Livingston on December 22, 2014 06:00:00 am
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Banks eager to lure new customers offer a dizzying array of reward cards, offering bonuses from cash back to frequentflier miles to points you can spend on gift cards or merchandise. But how can you tell which one is best for you? Here are some questions to ask yourself when choosing the best rewards credit card.
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Reward credit cards questions to ask How are points earned earned? Many cards reward you at a higher rate for spending in particular categories, such as air travel, dining, groceries, or gas. Look for one that rewards you for purchases you make most frequently. How fast do rewards pile up? For cashback cards, you can just look at the percentage you earn; for cards that pay points or miles, you may need to do a little math to see what the points are worth. Many cards offer a onetime bonus for signing up—say, an extra $100 back after you’ve charged your first $500—which can give your firstyear earnings a big boost. What rates and fees are there? A card with an annual fee is only worth it if you earn enough in rewards to cover the fee and then some. That’s more likely to be true for you if you charge a lot on the card each month. If you ever carry a balance, consider the interest rate as well. How easy can rewards be redeemed? Rewards do you no good if you never get to cash them in. Travel cards may have restrictions on when and where you can travel, while pointsbased cards may have limits on where the points can be spent. Make sure you can work within the card’s limits. What other restrictions are there? Some cards have a cap on how much you can earn. If you’re not a big spender, that may not matter; if you are, you can get around the limit by using multiple reward cards.
Using your rewards card effectively Once you find the right card, you can continue to maximize your rewards by using it right. The folks at Credit Karma, a creditmonitoring site, offer these tips: Pay off your balance monthly. If you carry a balance, the amount you spend in interest will almost certainly outweigh what you earn in rewards. Cash in rewards regularly. Points you’ve earned may expire or drop in value over time, so it’s best to redeem them on a regular basis. Don't overspend to get rewards. This is an easy trap to fall into, but busting your budget just to earn more rewards is like buying something you don’t need just because it’s on sale.
To learn more about credit card rewards Some credit cards dangle the promise of 0 percent interest to lure new customers. But those interestfree credit cards often come with a catch. This video by our friends at Consumer Reports tells you about credit card risks to watch out for Plenty of bigbox and department stores offer credit cards of their own. But store credit cards come with risks all their own. This Consumer Reports video outlines the pros and cons of store credit cards.
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Posted at 06:00:00 AM in Amy Livingston | credit cards | Featured | Finance | Money & Shopping
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