Are Rewards Credit Cards as really Rewarding as they promise to be?

Is it really rewarding to have a rewards credit card? Before we answer that question, let’s take a look at the past.

A Brief History of Reward Credit Cards

The first credit card was introduced in 1950. Frank McNamara came up with the Diner’s Card, a credit card which can be used to pay for restaurants and diners. According to the story, Mr. McNamara was having a business meeting at a restaurant when he encountered an embarrassing situation. He forgot his wallet and his wife had to bring it to him so he could pay for his bill. Since then, the Diner’s Card was born and the emergence of other credit cards started.

In 1986, Discover launched a cash back rewards program for its credit card holders. They also came up with the “frequent flier” rewards program in a tie up with Continental Airlines. Since then, the competition among different credit card issuers and banks brought about different types of credit card rewards that offer discounts, cash rebates, and free travels to customers.

Today, credit card rewards programs offer specific incentives that matches a customer’s lifestyle. Banks have also paid attention to business owners and have come up with business credit card rewards programs. Generally, reward programs are done with the support of participating establishments, gas stations, merchants or airlines. Thus, the incentives that credit card holders can receive vary from free fuel, free travel tickets, and discounts from various types of stores.

Are rewards credit cards really rewarding?

The truth is, the answer will depend on the credit card holder. Rewards credit cards can be truly valuable if the credit card holder owns the right type and if he knows how to use it well. Because rewards are only obtained after collecting points, it is important to consider if you’ll be able to gather enough points to qualify.

If you want enjoy the benefits of owning a rewards credit card, consider exactly what type of rewards you need. For instance, if you travel a lot, then you should definitely consider obtain a credit card that offers travel rewards. However, not all travel reward credit cards are the same.

It is important for you to find one with terms that will work for you. How will you be able to earn the rewards? How many mileage points are needed before you can qualify for a free travel? Do you think you’ll be able to earn it without spending more than what you can afford to pay? If it will take such a huge amount before you get to earn a single reward, perhaps a travel rewards credit card may not be the best choice for you.

If you’re going to get any type rewards credit card, make sure that you learn about all the terms that apply for earning the rewards. The best reward credit card will let you collect points for as long as you renew your membership. Also, you should be able to add your unredeemed points each time you apply for a renewal. If a credit card limits you with a time frame for collecting points and redeeming your rewards, there’s a big chance that you will not be able to claim your rewards at all.

Also, watch out for rewards credit card which has very expensive annual fees. If you have to pay such a big amount every year just to renew your membership, then it defeats the purpose of receiving rewards. Aside from the annual fee, make sure that the APR, penalty fees, and other costs are reasonable as well.

Lastly always remember that reward programs are supposed to work to your advantage, not put you in debt. Don’t be tempted to use your credit card just for the purpose of collecting points. If your rewards credit card causes you to spend more than what you really need and makes it difficult for you to keep up with your monthly balances, then that’s not very rewarding credit card at all.

More Rewards:

Airline Reward Credit Cards

Cash Reward Credit Cards

Gas Credit Cards Reward

Save Money Through Credit Card Rewards

Credit cards with reward programs are meant to give bonuses and special privileges that non-rewards cardholders don’t enjoy. Yes, by choosing the right type of reward credit card, it is possible to save more from your spending and enjoy more benefits from your credit card.

The most popular types of reward credit cards are those with cash back rewards, gas rebates or gas rewards, and travel rewards or frequent flyer miles credit cards. Some credit card issuers offer a combination of two or more types of rewards so customers can have the option to choose.

For instance, there are reward credit cards that enable its holders to redeem their points as cash, cheque or gift certificates, free travel, as merchandise, or as credit to their accounts. There are even credit cards that allow you to donate a percentage from the rewards you earned to your chosen charitable institutions.

For business owners, small business credit cards with rewards are great tools for building business credit while getting more from your spending at the same time. Since businesses tend to spend on larger purchases, they can collect bigger points and claim rewards more quickly than consumers.

Credit cards with rewards – High Rate Credit Cards?

It is true that credit cards with rewards often have higher APR than non-rewards credit cards. Interest rates may range from 15% to 20% for credit cards with rewards. However, this doesn’t mean that you can’t find ones with reasonable interest. The key to finding the right reward credit card is doing research and comparison.

Find out more on: Save Money Through Credit Card Rewards

Tips on Using Credit Card Points to Your Advantage

Before signing up for that reward credit card, make sure that you know how you can get the most out of it. Consider the following tips on using credit card points to your advantage.

Pay off your complete balance. Even if the credit card promises amazing rewards, don’t forget to consider the cost that comes with it. For instance, how much is the interest rate you’ll need to pay each month if you fail to pay off your entire balance? Most reward cards charge around 18% APR while others charge more.

If you do decide to get a reward credit card, the only way you can make the most out of it is by paying off your monthly balances in full each time. Otherwise, you may find that the cost of interest you’re paying is way more expensive than the actual value of the rewards you receive.

Find out more on: Tips on Using Credit Card Points to Your Advantage