Credit cards that offer rewards are a convenient way to get cash back or other benefits for making purchases. It doesn't matter if you're getting cash back on groceries, frequent flyer miles, or points for dining out; it all adds up to the same thing: getting some of your money back. But with so many options, selecting the best rewards card can be difficult. So here are some suggestions to help you zero in on the optimal solution.
Do you think a rewards card would be helpful for you?
To determine if a credit card with rewards is necessary, one must decide if such a card meets one's needs.
You may benefit from getting a rewards card.
Get your credit in order. With a higher credit score, you may find it simpler to be approved for cards that come with better perks and rewards.
Clear your debts immediately. You can avoid interest by paying off your balance in full every month. That's good news because it means your earnings aren't being diluted by interest.
Get the bonus for signing up. Numerous reward cards have enticed new-member bonuses. If you open an account and are eligible for a welcome bonus, you may be able to earn some extra rewards quickly.
Invest in some regions of spending. While some cards offer a consistent reward rate for all purchases, others offer tiered rates that allow you to earn more points, miles, or cash back in specific categories. Compared to a card that offers a flat rate of rewards or no rewards, one that offers tiered rewards based on your spending habits may be preferable.
Some people possess a solid attachment to particular products or brands. Using a rewards card can be beneficial if you are strongly attached to a specific brand. Using a co-branded hotel or airline rewards card, for example, may give you elite status, access to exclusive discounts, or other perks.
A trip budget can be tricky, but a travel credit card can be a convenient way to cut costs. Free flights and hotel stays are just two examples of what can be obtained by collecting miles or points through shopping.
When these conditions are met, applying for rewards and a credit card may be the best action.
In contrast, if you only intend to use your card as an emergency funding source or if you aren't interested in rewards, it might not be worthwhile to apply for a rewards card. If reducing your number of high-interest credit card balances is a priority, you could also look into a balance transfer credit card that offers a 0% introductory APR.
Considerations for Choosing a Rewards Card
Many reward cards are available, and the options may initially seem overwhelming. But by asking yourself some basic questions, you can narrow the field of possible outcomes.
Do you like things to be straightforward?
As previously mentioned, some reward cards provide a flat rate regardless of how much is spent. For example, you could receive 2% cash back on all purchases, double miles on all assets, or both.
Some cards have a rewards system with different tiers. Thus, you could get 3% cash back on gas and 5% or 6% on groceries.
It's also possible to find cards with bonus categories that change periodically. For example, depending on the specifics of the rewards program, you could get 5% cash back on dining out for the first $1,500 you spend each quarter. As each quarter begins, a new category of purchases will be eligible for the 5% rewards rate.
Flat-rate incentives could be a good option if you'd rather not have to keep track of any numbers. Instead, decide which credit card is best by calculating how much you could earn in rewards each year.
What do you do with the cash you have?
You can get the most out of your rewards using a card that fits your spending habits. For example, it may not make sense to get a card that rewards you for booking travel if, for instance, your monthly charges consist mainly of groceries and gas.
Consider your typical spending habits. Inspecting your financial records from the past six to twelve months is a quick and easy method.
Create distinct piles for distinct types of purchases as you go. Examples of these cards include a grocery store card, a gas station card, a restaurant card, a hotel card, a travel card, a department store card, a discount card, a general-purpose store card, and a sundries card.
Consider your spending habits before settling on a rewards credit card. Depending on your spending habits, you may even decide that more than one card is necessary (i.e., a cash back credit card for groceries, a miles card for travel, etc.).
Did you like to eat?
Some rewards credit cards are specifically for those who enjoy dining out. Their loyalty programs are usually geared toward the things that foodies buy. In other words, that includes going out to eat, ordering in, and shopping for groceries.
If you're part of the trendy foodie crowd, you might want a credit card with rewards tailored to your spending habits.
The method of transportation
The right rewards card can help offset the financial impact of trip expenses. Whether you frequently travel or rarely do so and how you typically book your trips are relevant factors in selecting the best rewards card. A simple travel credit card could be a good place to begin if you're just getting started with travel rewards.
If flying is your preferred mode of transportation, you may want to consider a credit card that offers travel rewards in miles or points. More miles will allow you to take more trips without paying for airfare.
If you frequently use rental cars, take cruises, or take trains when traveling, you may want to consider a credit card that offers rewards on all travel purchases. However, check for restrictions first, as some cards have a more limited definition of "travel" than others.
How about specific hotel chains, department stores, or airlines?
Brand loyalty can be rewarded by using a rewards card that offers bonuses or other perks for purchasing at a specific store, airline, or hotel chain. You may want to choose a rewards card that aligns with your brand preferences if you have them.
Conversely, if you don't always shop at the same store or stay at the same hotel, you may want to go with a card that isn't tied to a specific brand. You could, for instance, try to find a travel rewards credit card that allows you to transfer your points to specific frequent flyer programs at a rate of one point per one mile flown. In this way, you can make sure to take advantage of all possible applications for your rewards.
Other Perks of Reward Cards
Each credit card rewards program may be an essential factor in your decision. Nonetheless, it's crucial to consider more than just rewards when choosing a credit card.
Some of the perks and conveniences that may come with a rewards card include the following:
- Get your bags checked for free.
- Faster boarding service
- A way into the airport's posh waiting area
- Low rates and provisions for covering rental car damage
- Possibility of receiving special hotel offers and discounts
- Reduced or waived resort fees.
- Waivers of the Global Entry or TSA Pre-Check Application Fees
- Professional assistance in locating and securing desired items
- Insurance for mobile phones
- Assuring Your Satisfaction With Your New Purchase
- Insurance for the Long Haul
- Insurance for your trip
- Keeping an eye on your credit rating
- Safety from Scammers
The potential value of a card increases if it offers numerous bonuses and conveniences. Whether or not those advantages are helpful depends on how often you plan to use them.
Therefore, a frequent flyer may value amenities like free checked bags or access to airport lounges. On the other hand, a typical consumer may care more about warranty extensions and return policies. Looking at your rewards card as a whole can help you figure out how much it might be worth.
It's essential to compare the annual percentage rate (APR) and fees of rewards cards before making a final decision (APR). A yearly charge is the most likely scenario. While some credit cards don't apply this until after the first year has passed, others begin doing so immediately.
Consider how quickly you would earn back the annual fee on a card with rewards if you were to use it. You should be earning more than the annual fee in bonuses each year. Alternatively, the card's perks should more than offset the cost.
To get an idea of how much you might end up paying if you carry a balance from month to month, it's a good idea to check the annual percentage rate (APR) that applies to purchases in addition to the applicable fee. Also, be aware of the expiration date of any introductory APR offers before making any large purchases or balance transfers. This way, you can plan accordingly and pay off assets and balance transfers before applying the standard interest rate.
Thus, in conclusion,
Having a rewards card in your wallet is a great way to get cash back or other benefits for your spending. If you do your homework and ask the right questions, picking one won't be hard.