Here's the Basics:
First of all, make sure you compare
apples to apples when choosing a reward credit card! Depending
on your lifestyle and personal interests, different cards
tend to make more sense than others. Instead of trying
to choose between a gasoline credit card and an airline
credit card, look at your spending habits and how meaningful
the payouts are first to see which type of program would
work best for you. Because different cards reward different
kinds of purchasing behavior, pick the offer that will
benefit you for what you do the most!
If you don't travel much, then
an airline credit card wouldn't make sense since you won't
be able to maximize your bonuses and earn extra points.
Plus, you're less likely to need the rewards you earn
anyway-- so you'll be wasting time and money on higher
interest charges and / or annual fees. Likewise, a shopping
or rebate card tends to pay higher reward percentages
when shopping a specific locations. Do you frequent these
locations? And can you use the rewards?
Factors to Consider:
Once you choose the type
of reward credit card that will benefit you the most,
consider the following factors to determine the best deal:
- Reward Percentage / Amount:
This is probably the BIGGEST factor to consider! How
much will you earn? Percentages / points can vary greatly
between offers. Look at how generous the company is
and where you must make your purchases to earn points.
- Bonus Rewards / Points:
Many rewards programs offer "double rewards" for a specified
introductory period or "bonus points" for
getting approved. How much extra can you earn? How long
is the introductory?
- Fees: Many reward credit
cards have annual fees. Are there any with no annual
fee? Which card has the lowest? What other fees are
associated with the offer?
- Reward Limits: Unfortunately,
many credit card companies have decided that there can
be too much of a good thing. Therefore, they've set
limits on how much rewards you earn; normally, on an
annual basis.
- Reward Form: In what
form do you receive the reward? Cash? Credit applied
to your credit card statement? Points that you exchange
for items? This really depends on how you personally
like to deal with your rewards.
- Reward Expirations:
Do the rewards expire? How much can you convey over
a calendar year and how long are your rewards ultimately
good for before expiring?
- Reward Limitations:
How can you spend your rewards? The most open-ended
program would simply send you a check that you could
cash or apply a credit towards your credit card balance.
Programs with the most restrictions may only allow you
to use your rewards for future purchases towards a specific
item (such as leasing or buying a new car, or shopping
at a specific location).
- Lowest APR: Which card
has the lowest APR? Is there an introductory APR with
the offer? If a 0% offer is available, consider it first
since you'll save the most money during the intro period.
Which card has the longest intro period?
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