Rewards Credit Cards – Are They As Rewarding As They Promise To Be?
Many people want to get a rewards credit card than a non-rewards card. But are credit cards with rewards really as rewarding as they promise to be?
A Brief History of Reward Credit Cards
Discover introduced the first reward credit card in 1986 with the Discover Cash Back Rewards Credit Card. Later on, Discover partnered with Continental and introduced the Frequent Flier Rewards Credit Card.
Today, many credit card companies have their own version of credit card with rewards. Various reward programs such as cash back, travel rewards, and gas rewards are available in the market.
Even small business owners can now apply for their own business credit cards with rewards. By using a reward credit card for their business spending, small business can get more bonuses, discounts and privileges.
Are rewards credit cards really rewarding?
A reward credit card is rewarding if you can earn rewards without spending more than you need. Remember, you can only get reward points by charging expenses to your card. However, if you can’t pay back your charges on time, you can forfeit your eligibility to redeem your rewards and you can get penalized with high interest rates and late penalty charges.
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To get most from a reward credit card, you should determine which type of card fits best with your spending style and needs. Do you travel a lot? If yes, consider getting a Frequent Flyer Credit Card or a Gas Station Credit Card. Do you spend a lot on your groceries? If you do, perhaps a cash back reward credit card is the most practical choice for you.
Last but not the least, a reward credit card holder should be clear about the exact rules and restrictions of the card’s reward program. What types of purchases will qualify you to earn points? What is the minimum number of points required before you can redeem your rewards? Is there a blackout date or an expiration period? How much is the maximum value of rewards you can earn? These are important questions that you should know the answer to.
How much will it cost you to keep your reward credit card active? How much is the annual fee, late penalty fee, over-the-limit charge, and transaction charges? More importantly, how much is the APR?
You can only be sure about the real costs of a reward credit card if you take time reading the Terms and Conditions. Don’t be discouraged even if the contract seems too long or written in very fine print. Never sign up for a credit card unless you’ve done your homework and research about it. This is the only way you can be sure that your credit card will be rewarding.
In the past my wife has had me give up one card to be replaced by another. She only lets me carry 1 to 2 cards. Anyway, the reason was that she had great rewards deals going on the new card. I didn’t think much about it at the time. We spent normally forgetting about any cash back. A year or more has passed. So far we have cashed in around $1,450 in rewards. It really came in handy. So, as far as I’m concerned it was well worth it. I suspect rewards will become a thing of the past with the new banking/credit card legislation when it goes into law. The banks won’t be giving away anything. Thank for the post. Your whole blog is very informative. All the best.
@ Bill Beavers
Thank you very much for sharing about your experience, this will surely help our readers. All the best to you too!