Credit - Rewards Cards: Are They Worth It?

Rewards Cards: Are They Worth It?

Virtually all consumers will have a credit card at some point in their lives. Is this an understatement? Probably, as most consumers carry multiple credit cards. Selecting a credit card should not be something taken lightly; card companies are constantly looking for new consumers, but only after wisely comparing offers should you select a provider. Pick a company that will give to you a reasonable rate and one that incentivizes their program with some type of reward for using their card.

So, how do rewards cards work? Almost without fail, rewards cards typically give consumers money back on their purchases [usually 1-2%] or allow you to accumulate points toward prizes or discounts on future purchases. If you charge $10,000. per year [not hard to do if you charge your groceries] and your rewards card pays you a 2% reward on purchases, you will receive $200. from the company. Usually you will gain the funds in the form of several credits to your account spread out over the course of a year, but in some cases you will receive the rewards in the form of a check.

Rewards cards are free money, right? Only if you do not have to pay an annual fee and you pay your credit card off every month. If you do not pay your card off every month, your reward could easily be overshadowed by monthly interest payments, especially if your interest rate is high. Not too many companies pay rewards and give you a low rate at the same time. In theory, even if you carry balances for as little as 2-3 months before paying your card off you could find your rewards for the entire year outweighed by finance charges.

When rewards are given in the form of points that you later can redeem for prizes or take discounts on future purchases, you need to consider the following when selecting your card:

1. Is the reward program for something you know you will use? For example, if you are a member of GM's rewards program, are you certain that you will be purchasing a GM product in the future? If so, go with this card as the return can be as high as 5%.

2. Is there an annual cap on purchases? Many rewards cards will limit to you the amount of cash back funds or rewards points you can accumulate in one year. Most people never come close to the figure, but if you are a business traveler you can quickly approach and pass these limitations within the year.

3. Do points eventually drop off? The majority of rewards cards only allow you to accumulate points for three years before they begin to drop off. If your next car purchase is five years away and you have a program that drops off points, you could find the first two years of card usage to be a waste as those points would vanish. If you still want that particular rewards card, only use it in years 3, 4, and 5 so that when it comes time to purchase your new car you will not have lost any points. You could consider getting and using another rewards card for a different rewards system to cover years 1 and 2.

All in all, rewards cards can be a useful option for the savvy consumer. Remember, points do fall off and carrying balances from month to month will wipe out the value of the card in short order. By showing plenty of discipline you can make rewards cards work well for you.

Matt is a writer, web designer, and marketing manager based in North Carolina, USA. Matt writes on a variety of subjections related to business and travel. His primary website is for business flight attendants and can be found here: http://www.corporateflyer.net.

Car Insurance | Car Rentals | Health Insurance | Weight Loss | Life Insurance

| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 |

Credit Cards Or Store Cards - Which Is Better?
IntroductionIn this article, a presentation is made of the differences between major credit cards and credit cards offered by specific stores to their customers. The purpose of this article is to provide a general overview of major credit cards and store cards to aid consumers in making decisions regarding which lines of credit lines...(related: Credit)

Credit Cards
If gold medals were awarded for marketing consistency, the credit card industry would be the Sarah Hughes of the business world. Major players Visa and MasterCard, who have maintained their steady rates of spending and commitment to their positioning platforms for years, will stick to their established routines this year. Freshening their programs will be updated creative and the occasional push behind new products and promotions.Discover and American Express will mix it up by introducing new taglines, but they will keep to their traditional big ad spends to bring their messages to consumers.MasterCard, which last year spent $197 million, per CMR, will continue its successful "Priceless" campaign through 2002. In addition to general brand-building spots, MasterCard will use advertising to support ...(related: Credit)

10 Ways To Protect Your Financial Identity Being Used For Someone Else?s Shopping Spree
Someone impersonating you could be spending your hard-earned money.Impossible! Not really, check, loan, and identity fraud are a real problem. In 2002, the federal trade commission estimated that identity fraud affected and estimated 3.3 million Americans; costing consumers $3.8 billion and business $32.9 billion.Here are 10 ways to protect yourself from having your financial identity used for someone else's shopping spree:1. Order your credit report once a year from each of the three credit bureaus to make sure that you are familia...(related: Credit)

Different Ways To Borrow Money
There are many different ways to borrow money. Outlined below is a useful guide to some of most common ways of borrowing money.LoansThere are many loan companies offering to lend you money. They will check your credit worthiness and may offer you a secured loan or an unsecured loan.A secured loan means that you undertake to give ...(related: Credit)

Make Sure Your Credit Report Is Correct To Improve Your Interest Rates And Lower Insurance Premiums
Did you know that you could make sure to get the best rates on your auto and homeowners insurance simply by having a good credit score.Additionally a great credit score will allow you to get the best interest rates on your credit car...(related: Credit)

Applying For Credit Cards Online
In the olden days, about 10 years ago, before the internet, consumers would have to fill in app...(related: Credit)

The Art Of Stoozing To Make Money From Credit Cards
Make Money from StoozingStoozing, this is a sophisticated method of making money from credit cards that of...(related: Credit)

Bankruptcy Myths Busted
The average American knows very little about bankruptcy. Most people probably are aware of bankruptcy's ability to dissolve debt and give the debtor a fresh start. Some of the information you might have heard is correct, but some is not. The purpose of this article is to dispel some of the most co...(related: Credit)

Why Your Credit Score Is Important
Your credit score can either haunt you or reward you. It all depends on how you handle your credit and payment activities. Your credit score determines what interest rates you will pay and if you are even approved for a loan or a credit card at all. In addition, your credit score can play a factor in renting your next apartment or getting hired from a potential employer....(related: Credit)

Good Vs. Bad Credit Debt
Do you know the difference between good and bad credit debt? Most everyone seems to think that all debt is bad, but that is not always the case. In fact, there are some instances where good debt can actually help your financial situation.The differences between good debt and bad credit debt will affect every loan you get and ca...(related: Credit)