What is a rewards card?
A rewards card is a credit card that offers benefits to its user every time it is used to make a purchase.
What type of rewards are available with a rewards card?
One common type of rewards card offers cash back. The amount of cash back is typically based on a percentage of purchases (i.e. 1% of purchases). Another common type of rewards card earns airline miles for every purchase, which can be used to earn free flights (i.e. 1 airline mile for every dollar in purchases). Other benefits from using a rewards card are offered in the form of 'points', which can be used to purchase a variety of products and services.
What kind of interest rate is available on a rewards card?
If the rewards card allows you to carry a balance for longer than a month, the interest rate is likely to be higher than credit cards that do not offer rewards.
Is a rewards card right for me?
If you pay the balance on your rewards card every month, using a rewards card can be an excellent way to receive benefits for frequent card use.
However, if you do not pay your balance in full every month, the interest charges on the outstanding balance could offset the value of any rewards you have received by using a rewards card.
Things to consider when shopping for a rewards card
- Does the rewards card charge an annual fee? If so, see if you can find a comparable rewards card that does not charge an annual fee.
If you cannot find a comparable card without a fee, make sure that you will use the rewards card enough so you can earn enough rewards to offset the fee.
- If you are seeking airline miles as your preferred reward, try to find a rewards card that offers miles for the airline of your choice.
An even better option is to find a rewards card that offers a choice of airlines with which you can use your miles.