Read the Fine Print When Choosing a Rewards Credit Card

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Like getting cash back, frequent flyer miles, or other rewards when you use your credit card? If so, check the fine print on card offers to make sure that what you think you're getting is what you actually get. Here are seven tips to keep in mind when searching for a credit card that pays you back, according to industry Web site IndexCreditCards.com.

Like getting cash back, frequent flyer miles, or other rewards when you use your credit card? If so, check the fine print on card offers to make sure that what you think you're getting is what you actually get. Here are seven tips to keep in mind when searching for a credit card that pays you back, according to industry Web site IndexCreditCards.com (http://www.indexcreditcards.com):

1. If you carry a balance on your credit card, do not get a rewards credit card. First things first. Most rewards credit cards have higher interest rates than non-rewards cards. If you carry a balance on your cards, it is almost impossible to earn more from rewards than you will pay out in extra interest charges. However, if you pay off your cards in full each month, read on.

2. Beware the words “up to”. When searching for cards that pay cash rebates, look for offers that promise a “full” percentage rebate, such as a “full 1% rebate.” If a card says you can earn “up to” a certain percentage, that usually means you’ll earn much less until your yearly purchases reach very high levels.

3. Don’t just look at points offered -- check the cost of rewards, too. Most consumers looking for a rewards card look at how many points or miles they can earn. But what are those points getting you? In most rewards programs, a point earned equals a penny in actual spending power. In other words, 5,000 rewards points equals about $50. So, if your credit card’s program is charging you 10,000 points to get a $50 gift card, start looking for a better offer. Similarly, most airline rewards cards give free flights when you reach 25,000 points. If your card requires more, you’re not getting the best deal.

4. If you don’t charge much, choose a card that offers quick rewards. An airline rewards card can be great if you charge a lot to your card, but if you don’t, it could be years before you qualify for a free flight. If you don’t purchase with credit cards very often, look for a card that offers rewards at low point levels. Many cards offer rewards with as few as 1,000 points -- retail gift cards, small electronics and appliances, jewelry and more can be yours without having to hoard points for years.

5. Use gas rebate credit cards only at “true” gas stations. Given recent gas prices, gas rebate cards are very popular. They’re generous, too, giving as much as a full 5% back on gas purchases. But watch out: most gas credit cards give the big rebates on purchases at traditional gas stations only. If you make your gas purchases at wholesale clubs, supermarkets, or other locations that don’t fit the card’s guidelines, your reward becomes a whole lot smaller.

6. Avoid annual fees, unless... In most cases, paying an annual fee for a rewards credit card defeats the purpose of the card. If you have to pay $40 per year for the card, you aren’t actually earning anything until you’ve charged over $4,000 to the card. However, if a card offers you an extra incentive to pay a fee, such as double airline miles on purchases, it could be worth the cost, especially if you pile up big charges on your card.

7. Check for earnings caps and point expirations. In most instances, there is a limit to how much you can earn with a rewards credit card. Make sure you know what that limit is, especially if you put a lot of charges on your card. For example, it’s great to get 5% back on gas purchases, but if your card stops paying when you hit $300, anything you charge over $6,000 per year would earn nothing. Also, be sure to understand if your points will expire at some point in the future – you don’t want to rack up points only to see them disappear unused.

“Do it right and you can earn significant rewards without paying your credit card company a cent,” says Justin McHenry, Research Director of IndexCreditCards.com. “But if you have trouble making your credit card payments, focus on getting the lowest interest rate and don’t let rewards entice you.”

About IndexCreditCards.com

IndexCreditCards.com offers credit card news, research, and perhaps the most comprehensive index of credit cards available on the Internet today, with a master listing of over 700 credit cards as well as categorized lists based on interest rates, reward programs, business credit cards, student credit cards and credit cards for those with poor credit histories.

Information provided in this release may be reproduced free of charge, provided credit is given to http://www.IndexCreditCards.com.

CONTACT: Justin McHenry, 216.221.0312

WEBSITE: http://www.IndexCreditCards.com

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