If you are in the market for a rewards credit card then there are a lot of things to consider before deciding which card is right for you. In order to qualify for a rewards credit card you will most likely need to have good to excellent credit. Therefore your main goal is not to improve your credit (although that will happen anyways with responsible use), but to earn as many rewards for the money that you spend as possible. These rewards you can earn are tempting and can have the ability to make you spend more money than you normally would. So don’t let a rewards credit card be your excuse to spend more money, let it be the reason you get paid back for the money that you have to spend.
What Do You Already Spend the Most Money On?
Reward credit cards come in all kinds of forms and variations on the ways you can earn bonuses from them. The most basic form of rewards from a rewards credit card is a return of 1% on the money you spend. This can come in the form of cash back, points, miles, or whatever method they choose. Then from that base 1%, reward cards can offer extra if you spend your money on certain categories. For example, a specific rewards credit card could offer a basic 1% cash back on all purchases, but 3% cash back on gas and grocery purchases. So if you have a family with kids that have to be driven all of town and buy a lot of groceries, a rewards card with a gas and grocery bonus would be your best bet.
If you travel a lot then take a look at travel and/or airline reward credit cards. The same goes for someone who frequently stays at the same hotel brand when they travel. There are branded credit cards that offer basic rewards when you redeem your them for normal things like cash back or discounted shopping items. But if you redeem your rewards at whatever brand your rewards credit card is for, then you can get much more value out of them. The key is to find out what you spend most of your money on and see what kind of rewards you can earn from the cards that are available. Then, if you frequently use a certain company or brand to spend your money, see if they have a rewards credit card that can allow you to get more out of the rewards that you earn.
Who Doesn’t Like Credit Card Signup Bonuses?
It is not the best practice to close and open new credit cards at a frequent rate. So a sign up bonus that a credit card is offering should not be the only reason why you choose a certain rewards credit card. But it will certainly help. Rewards credit cards often offer bonus rewards for spending a certain amount of money in a certain amount of time. Some even offer a bonus after you make your first purchase. And these bonuses can be something worth looking into, as there are plenty of examples of credit card signup bonuses that are over $300. If you are debating between a handful of cards that you think are right for you, then the sign up bonus might be the deciding factor. But you need to look at the long-term rewards that you will earn and which card can get you the most over time.
Avoid Interest at All Costs
As with any credit card if you do not pay your balance in full each month you will be charged interest on what is left over. This interest will certainly erase any rewards that you have earned and you will be doing the exact opposite of what you originally planned. Paying more money for something rather then being rewarded for it. Just like you, credit card companies are in the business of making, or saving as much as possible. So they hope that you will be drawn into choosing a certain card because of the rewards that it offers, and then leaving a balance on it so they can make the money back for the rewards that they are paying you.
Prepare to Be Rewarded
If you have a good to excellent credit then you will most likely be able to qualify for the best rewards credit cards possible. After that, you have the task of finding out which one will work best for you and get you the most rewards in return. When you are shopping for a particular item you try and find the best deal. When you eat out you try and get the best food for the best price. The same goes for the rewards credit card that you choose. It feels good to be rewarded and especially if you are being rewarded for money that you were going to spend anyway. Your checking account or basic credit card doesn’t offer any rewards for using them to spend money. A rewards credit card does, and by getting the one that works best for you, you will be on your way to rewards that could include free travel, discounted shopping, cash back and much more.
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