What Are Credit Card Rewards
The credit cards which offer “rewards” are willing to do this by keeping track of the number of purchases for which the cards are used.The variety of rewards offered by credit card companies is virtually endless, with some of the popular rewards being air miles or discounts off of the cost of certain airline’s flights.Many stores and retailers also offer “loyalty” rewards if you are using a credit card issued in their name and some credit cards will give the opportunity to earn discounts on the purchase of a new car.
You should be asking yourself if these rewards are worth it, in spite of how desirable they may be.If you make a comparison of the interest charged on purchases made with the cards that have rewards and the ones that do not, you can answer this question easier.Although there are any number of rewards credit cards offering some sort of reward or loyalty bonus, the lowest rate of interest on such a card is likely to be in the region of 15% APR.This interest rate is much more than the zero percent interest rate on the introductory offers of many other credit cards and about 7-8% more than the interest rate of a basic low-interest credit card.When you examine the whole assortment of credit cards that offer rewards you will find that the interest rates on some will be well over 30% APR.
If your credit card is one of those that has these higher rates of interest and you are using it to earn enough points to get the types of rewards you want, it may be a better idea to switch to a lower interest credit card and save money instead of reward points.If you pay off the whole balance on your credit card before payment is due, and so you really never have to pay interest, the rewards for using the card are actually free.You may want to consider the alternate choice of the cash-back credit card if you are not sure you can maintain the discipline of paying off the whole balance of your credit card each month.Similar in principle concept to the reward credit card, a cash-back card pays back, in cash, a preset percentage of whatever has been spent on the card each month.
The best cash back rate is currently around 5% on what is spent, and with 19% APR in interest it becomes very obvious that you are paying a lot to be able to use the card.The interest charges can be avoided and the 5% cash back can be put into your own pocket if you are one of the consumers who is in the habit of paying all of your outstanding balances each month.
The gas credit cards that rebates in your gas or other cards that offer rewards or cash back can be worth using if you stay with a strict rule of repaying any outstanding balances before they are due and therefore, avoid paying interest charges.Your personal financial picture may be given a brighter focus when you are using these cards that offer rewards and cash back.
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