Even if you pay for items with cash to avoid a lot of credit card debt, there are advantages to having at least one credit card in your name. Credit cards are helpful in an emergency. If you don’t have cash for a car repair or bill, you can pull out your plastic, then pay off the credit card.
If you only use credit cards in an emergency, you can probably get by with a plain vanilla or no-frills card. But what if you’re a frequent credit card user? In this case, it pays to check out credit cards that offer a rewards program.
Credit credit companies offer credit card rewards as an incentive. The concept behind the rewards program is simple. Purchase items with your credit card, and earn points for every $1 you spend. The more you shop with your credit card, the more points and rewards you can earn.
Some people use their credit cards for everyday purchases, such as gas and groceries. And some people even pay their mortgages with a credit card. If you fall into this category, switching to a rewards credit card makes good financial sense. Make all your purchases with the credit card and you’ll maximize your reward earnings.
Credit card reward programs vary. The majority of these programs reward participants for every $1 they spend, but the rewards differ. For example, one credit card company may feature a point system, whereas another credit card company may offer cash back. The best rewards credit card really depends on individual preference.
You might prefer cash back, wherein you can apply your rewards to your balance or request a check from your credit card company. Then again, you might prefer the flexibility of earning points. With a point system, you can redeem your points for a variety of rewards, such as hotels, gift cards, cash, merchandise and airline tickets.
As appealing as a credit card rewards program sounds, there are a few things to consider. Understand that each program and credit card company varies. Some credit card companies have tight approval guidelines, in which reward cards are reserved for people with an excellent or good credit history. This is demonstrated by a high credit score and a good payment history with the creditor.
Additionally, credit cards with the best rewards typically have an annual fee, which can range between $39 and $450 a year (sometimes higher). It’s the price you pay for perks. What’s more, some credit card reward programs cap the number of points you can earn in a year, and your points may expire after a certain time.
If you’re interested in a credit card that features a rewards program, shop around to ensure you apply for the best credit card rewards. Ideally, you want a rewards credit card with a low annual fee, no earnings cap, no blackout dates and points that never expire.
Don’t choose the first rewards program you find online. Check with your present credit card companies to see what type of reward programs they offer. As a matter of fact, your existing credit card may even be connected to a rewards program already. In this case, simply enroll in the program to start earning points or cash back on your purchases.
To get the most out of your credit card rewards, use your credit card on a regular basis. Because frequent credit card use can increase consumer debt, a credit card rewards program might be better suited for people who pay their balances in full each month.