Should I Pick A Credit Card Based On The Rewards Program?

A majority of the current credit card commercials promote a rewards program. The rewards usually offer one or two percent back in the form of cash rebates or points, good on travel, hotels, airline tickets, and online goods.  Sometimes, these rebates can be as high as five percent. There are a number of key factors to analyze when picking a rewards credit card.

Annual Fees

Annual fees are costly. It is important to do some calculations when determining whether a card with an annual fee makes sense for you. Will you spend enough to earn substantially more rewards than the cost of the annual fee? Take a look at the added perks of the card to see if these are benefits you will use throughout the year to justify that annual fee.

Interest Rates

Credit card companies have to pay for those rewards somehow, and generally it is through interest rates. Some of the cards with the best rewards programs generally also have higher interest rates. This isn't always the case, so it is important to read the terms and conditions of the card. Compare the metrics of each credit card to make sure you are picking one that is right for you.

Rewards Program Details

Hidden in the fine print are numerous details about the rewards program. The headline may say you will receive five percent cash back, but this could apply to a limited number of purchases. Some programs may have certain spending tiers which must be met before the full rebate takes effect. Make sure you don't just pick a card based on "sell copy" in the card's promotional literature. Study the fine print to make sure the program really is as good as it sounds.

Rewards programs can be lucrative and a great way to make money off using your credit card. But, remember, a rewards program is only good if you pay off the entire balance on your credit card on time each month. Otherwise, the financial penalty on a credit card--called the APR--will more than eat away any rewards you may have earned.

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