When credit cards were first introduced, they were issued by merchants and had a pretty standard set of features. These days, the range of credit card deals you can get is staggering. With all the different interest rates, reward programs and fees available to you, its important to understand the difference and know what kind of card will suit your financial situation and your lifestyle.
Today the consumer has a variety of credit card awards and rewards programs to choose from. For instance, charitable donation rewards allow you to make a donation to the nonprofit of your choice, depending on how many rewards points you rack up through credit card purchases. Retail gift cards, or airline reward miles, are other points programs that are available to you as a consumer when you use a credit card with a rewards program.
While these may look good on the surface, it pays to look closely at your credit card rewards program to see just how rewarding it really is. Its a question more consumers might want to ask themselves, since in the last analysis, the reward value of a point may be far less than the dollar value, or real value, which you could be able to purchase with the equivalent amount of money.
For instance, gift cards can often be the most rewarding of points programs, if you can get a gift check at a retailer where you would be shopping anyway. Partnerships with selected retailers enable credit card companies to offer a gift card for less than their cash equivalent. But for many other programs, you may end up spending more than you are saving by racking up gift points. Additionally, if you carry a balance on your card, the amount of interest you end up paying can often exceed the value of whatever reward you are getting.
In the end, it pays to know the real value of your cards reward points program and what comparable cards without rewards programs are offering, in terms of interest rates and annual fees. If you end up spending more in interest and spending money you wouldnt otherwise spend, it might cost you less to go out and buy that airline ticket yourself than to get it through your free miles.
