Do you plan to apply for a reward credit card? If you do, then we encourage you to read the succeeding paragraphs of this article. Below we have listed down reminders that you need to be aware of, especially if you want to use a credit card with rewards in making purchases and in paying your monthly bills and other expenses.
Four Reminders on Managing Reward Credit Cards
1. It is not rewarding to carry a balance on a reward credit card from month to month. It is never recommended that you carry a balance on a reward credit card from one month to the next. Why? It is because credit cards with rewards normally impose higher interest rates than regular, non-reward card programs. Should you decide to settle only the minimum required payment on your card each month, for sure the interest charges imposed on your credit card account will make repayment difficult. So, to avoid making huge interest payments, reward credit cardholders are encouraged to pay their charges on-time and in full each month.
2. Understand what the term “up to” actually means. Most reward card programs advertise “up to 5% cash back incentives”. However, the term “up to” actually means less than or almost. So consumers may not always enjoy the full rate of rebates on the reward credit cards they use. This is why prospective cardholders are advised to take out credit cards with rewards which offer definite rates of cash-back incentives. This way they can have the assurance of yielding the greatest amount of rewards from the credit card accounts they intend to use.
3. Frequent flier miles are beneficial reward programs only to those who regularly charge their purchases and expenses on their cards. Travel rewards credit cards are only rewarding for consumers who frequently use their cards in making purchases as well as in paying their bills and expenses. Keep in mind that each point you earn is converted into mileage. So if you rarely use your travel reward credit card, you will be waiting years before you can qualify for free flights and hotel accommodations.
Thus, before you apply for credit card with rewards, you need to carefully consider your spending habits. If you think that you are only an occasional spender with credit cards, then you might as well take out a card program that provides perks and incentives even at lower levels of spending.
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4. Rewards and points do expire. Most credit card rewards lose their value if you fail to redeem them before their designated expiration dates. So, you need to bear in mind the expiration dates set on your earned points or miles. In so doing you can redeem your rewards and incentives before they vanish. Better yet, look for a reward credit card that does not impose blackout dates or expiration period on the points you earn so you can redeem your rewards at any time.