Are you thinking about getting yourself a reward credit card? Indeed, using a credit card with rewards is a great way to get more from your spending. In fact, cash back reward credit cards are a favourite choice among consumers. However, before you go and sign up for a cash back reward card, consider the pros and cons first:
The Advantages of Cash Back Credit Cards
Uncomplicated program. The program is quite simple for most of the best cash back credit cards. The cardholder is given 1 reward point for every dollar charged to the credit card. Most cash back issuer’s award points for all types of purchases. When it’s time to redeem the rewards, the cardholder can exchange it for cash, check or as credit to the account.
You don’t need to own a car or be a frequent traveler. While airline reward credit cards especially created for frequent travelers and gas reward credit cards are for car owners, credit cards with cash back rewards can be a good choice for everyone. In fact, you don’t need to be a big spender or collect a huge number of points to benefit from a cash back credit card.
The Disadvantages of Cash Back Credit Cards
High interest rate. Some cash back credit cards are known to carry steep interest rates. The APR can range anywhere from 15% to as high as 19% or more. If you will not be able to pay off your monthly balance in full each month, you might be better off with a non-reward card that has a low interest rate.
High maintenance fees. How much would you need to pay each year to keep your cash back card active? If you must pay $80 to $100 annually and all you get in return is a $50 worth of cash back, using a reward card may not be worth it.
Low caps on rewards. There are cash back cards that impose a limit or cap on the value of rewards you can earn. For instance, you may only be allowed to claim up to $100 worth of rewards in a year. If you exceed that amount, you may stop earning points even if you continue using your cash back credit card for payment.
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Choosing the Best Cash Back Credit Card
The advantages and disadvantages mentioned in this article do not necessarily apply to all cash back credit cards. If you do your research well, you should be able to find a cash back card with a reasonable rate, a minimal set of fees, a simple reward program, and that does not impose limits on the value of reward you can earn.
You can use the internet or check credit card review websites to compare cash back cards more easily. This way, you can narrow down your options more quickly and eliminate credit cards that are not as good as they seem to be. Last but not least, you should read the fine print thoroughly before signing up for the best rewards credit card.
Ann Wilson is the head writer of Reward Credit Card Site. This resource provides consumers with valuable reviews and information on the best credit card rewards program. Its main objective is to help people to take advantage of reward credit cards and start earning reward points. Copyright © 2008
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