Credit cards that offer you rewards are a great way to get a little something back for all of that spending that you’re going to have to be doing anyway. However, there are many different types of rewards cards to choose from and not all of them are going to be right for you. You need to know what to look for (and what to look out for) when you’re applying to get credit cards with rewards programs attached.
Here are some of the things that you’ll want to look for as well as things you’ll want to avoid as you consider applying for different rewards credit cards:
- Rewards that you’ll actually use. There is no point in adding up a bunch of rewards if you’re never going to use them. For example, there’s no point in getting a travel rewards card if you don’t really travel that often. And there’s no point in getting rewards that give you gift certificates to stores you don’t shop at. When in doubt, go with cash back credit cards since everyone can use more money in their pockets
- Annual fees. You’re not going to reap the benefits of having a rewards card if you’re paying just to own the card. Avoid rewards cards that have annual fees unless there is some compelling reason to get a specific low-fee card.
- Be aware that rewards may expire. Some rewards cards have points that expire after three years or five years from the time that they are awarded. In most cases, it shouldn’t be difficult to use the points before the time that they expire so this shouldn’t prevent you from applying for a rewards card. However, it’s certainly something to be aware of when navigating the world of rewards cards.
- Know that there may be a limit to the amount you can be rewarded. Many rewards cards have a cap beyond which you can not gain any more points within a calendar year. These caps are usually high and won’t impact most borrowers but you should know about them anyway.
- One card may have multiple ways of accumulating rewards. This can be good or bad. In good cases, double points or extra percentage points are awarded for specific types of purchases which can allow you to gain points more quickly. On the other hand, some cards only let you get the maximum amount of rewards after making a certain amount of purchases. For example, a card may offer “up to 1% cash back” but only give you 0.25% cash back unless you reach a certain spending threshold. Read the fine print.
- A good rewards card has bonus incentives. It will give you a big chunk of points after your first purchase or it will give you extra cash back if you hold off until a certain point before cashing in your rewards. Look for these bonuses.
Getting a good rewards card really just involves reading the terms of the reward program carefully and using common sense. You want to get as much as you can while avoiding fees and penalties that will take away from the rewards.
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