If you plan to apply for a reward credit card any time soon, this article presents tips credit card tips you shouldn’t miss.
On Types of Rewards
There is not one type of credit card that’s suited for all. Different credit cards offer varying reward programs and it’s important to choose one that suits your personal spending and lifestyle. Otherwise, you may not get rewarded at all.
Take for instance credit cards that offer Frequent Flier Miles rewards. Many people choose them over other rewards cards because the idea of traveling for free can be very tempting. However, what does it take to claim that free flight?
Most travel reward credit card will reward you based upon the mileage points you collected. Since points are equivalent to travel miles, you may need to collect a huge number of points as well. Hence, if you’re not a big credit card spender or if you’re not really traveler, it may be better to choose other type of rewards credit card.
Why Avoid Reward Credit Cards
Some people may be better off with a non-reward credit card. If you plan to carry over your balances from month to month, then you are strongly discouraged from obtaining a reward credit card. Why so? Because reward credit cards often carry higher interest rates so you could end up spending even more than the value of rewards you earn.
On the other hand, if you can pay off your balances in full each month, then a reward card can be advantageous for you since you can earn incentives and discounts from your spending. Nonetheless, see to it that you can manage your account effectively.
On Reward Credit Card Fees
Aside from higher interest rates, reward credit cardholders must also watch out for the extra fees. Do not just sign up for a reward credit card based on the rewards or the interest rate it offers. Always check out the fees involved and make sure that the maintenance costs will not offset the value of rewards you can earn.
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For example, how much is the annual fee? The annual fee is the cost you pay each year to keep your account active. Some reward credit cards carry annual fees ranging from $80 to $100 or even more. In this, consider carefully if the amount you pay annually still makes the credit card worth keeping.