Before applying for a credit card, it’s always smart to spend time reading the fine print. This rule applies regardless of what type of credit card you need. Whether you are in search for a business credit card, secured credit card, or reward credit card, don’t forget to check what is written in small print.
Listed below are pointers to keep in mind when you want a credit card with rewards:
1. Find a reasonable rate. Most reward credit cards are expected to have higher interest rates than non-rewards cards. This is why reward credit cards are not ideal for people who usually carry a balance in their accounts. If you’re going to pay the interest rate often, then you could be spending more on extra fees than being rewarded.
Check the fine print to understand what exact rate applies to each transaction. Take note that the APR applicable to purchases is often different from the APR that applies to balance transfers and cash advances. Of course, you’ll want to get a reward credit card that offers a reasonable interest rate that lasts.
2. It’s not the number of points, but the value of rewards. One reward credit card may only reward you with a $50 gift card in exchange for your 5,000. On the other hand, you can find reward credit cards that will give you cash back equivalent to the number of points you earned. Hence, if you collected 5,000 points, then you automatically have $5,000 cash back to spend as you want.
In comparing reward programs, don’t just look at the number of points offered. Instead, consider the value of rewards that you can get from those points.
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3. Restrictions can kill. All types of reward credit cards impose their own rules. But you’ll want to make sure that the restrictions do not defeat your purpose for getting a reward credit card. For example, there might a limit on the value of rewards you can earn per month or per year. Once you’ve reached the limit, you will stop earning points even if you continue using your reward credit card for shopping.
4. Watch out for phrases like “up to” and “as low as”. Sometimes, what seems like an attractive at first glance can turn out to be not so great at all. Phrases like “up to” and “as low as” can be misleading. Take note that these terms are always subject to certain conditions.
For example, if the credit card offers “up to” 5% rebate, you will only get the full 5% on qualifying purchases. Qualifying purchases may be limited to affiliated merchants or high-end stores that you don’t even shop from. Before signing up for a reward credit card, you’ll want to be clear about the specific conditions of the issuer.