5 Things to Look for in a Rewards Credit Card
To the average credit card user, all rewards credit cards may seem created equally. All rewards credit cards pay a certain amount of rewards on some or all your purchases, but that’s usually where the similarities end.
There are are usually enough differences between credit cards so can narrow down your selection to the best. For example, some credit cards pay higher rewards on travel purchases while others pay more on dining. If you’re on the market for a new credit card for your wallet, here are a few things to loo for in a credit card program to help you pick the best credit card for you.
Rewards on the things you purchase.
There are credit cards that pay higher rewards on certain categories of purchases. Others pay a flat rate rate of rewards on all purchases. If you choose a credit card that pays higher rewards, make sure the bonus rewards are on categories that you typically make purchases. Otherwise, you might have to drastically change your spending habits to maximize your earnings.
Rewards you can actually use.
Pay attention to the options for redeeming your rewards. Cash or statement credit may be the most flexible option for redeeming rewards. With some credit cards, you’ll lose value of your rewards when you redeem for cash. You may get more value from your cards when you redeem directly with your credit card issuer for travel, merchandise, or gift cards.
Some hotel, airline, and travel rewards credit cards even allow you to transfer your points to other loyalty program. Combining rewards you’ve earned from difference programs allows you to reach redemption status must faster. You can redeem for free flight or hotel stay, upgrades, or other travel perks.
Introductory rate on purchases.
Some rewards credit cards offer a promotional rate on the purchases made in the first few months of opening. While the rate may extend to balance transfers too, it’s better to use any promotional rate for purchases. Balances transferred don’t earn any rewards.
For example, if you’re planning a big vacation, a travel rewards credit card will let you earn rewards on your booking. A promotional rate would let you pay off the balance over time without incurring any extra interest cost. the promotional rate to pay off.
A reasonable annual fee.
You’ll find rewards credit cards with and without an annual fee. Some card users refuse to use a credit card that charges a fee. In some cases, the annual fee is worth the extra cost. Big spenders can typically earn enough rewards to offset the annual fee. On top of that, the card may come with extra perks that you can take advantage of to get even more value from the card.
Additional perks you can use.
Extra credit card benefits vary by credit card. You’ll find credit cards that waive the fee for your first checked bag. Others offer travel insurance, purchase protection, and extended warranty. Top tier airline and hotel rewards credit cards often offer a free companion flight or annual free hotel night each year on your card’s anniversary. You can typically find a list of credit card perks on the credit card issuer’s website.
Remember that you’ll have to pay your balance in full each month if you want to get the most value from your rewards card. That includes any annual fee that’s charged in the first month of having your credit card. Choose your card carefully. Otherwise, applying for too any credit cards in a short period of time can hurt your credit score and make it harder to get approved for future cards.