Credit card rewards programs sound like a really good deal. Who wouldn’t want to get rewarded for spending money?
Of course, we all would but does it sound too good to be true? Well, it may or may not be, so before you sign up for a new credit card with a rewards program, here are some things you should consider first:
Debit Card Rewards
Credit cards are not your only option to get rewards. Some debit cards do offer rewards too. If you’re not too good at managing your credit card debt, this may be an option for you. While debit card rewards may not be as great as those offered by most credit cards, you can still get some of your money back through cash back options or other rewards offered by debit cards.
Overspending to get More Rewards
One potential pitfall of rewards credit cards is a possible tendency to spend more to rack up your reward points. As a matter of fact, research shows that average monthly credit card spending increases for customers who have signed up for a rewards program with their credit card company. Can you resist the temptation? This is a real possibility that merits further consideration.
Credit Card Rewards Fees
Another thing to consider is whether the rewards you’re getting are worth more than the fees you’re paying for membership in the rewards program. Most rewards credit cards offer the first year for free as a signup bonus but after that first year ends, they resume annual rewards fee, usually just under $100. One thing worth remembering is that there are options for credit card rewards programs with no annual fees.
Different Types for Rewards Programs
Even if you decide that signing up for a rewards credit card is a good idea, you have to remember that not every rewards program may be right for you. Some credit cards offer rewards in form of a cash back, others points for purchases, or miles for airline travel. Also, some credit cards offer rewards for all purchases, others only on some type of purchases, such as filling up your tank. Depending on the purchases you’re going to make with your new credit card, you may want to shop around to learn more about the different rewards credit cards.
Keeping Track of Your Rewards
While there is a lot of success stories with people getting good value from their credit card rewards programs, there is also a great many rewards that go unclaimed, simply because the cardholders neglected to claim them. So, if you are considering for signing up for a credit card reward program, you need to also make a commitment to keep track of your rewards.
Blackout Dates for Redeeming Your Miles
If you’re a frequent flyer, getting a rewards credit card for travellers might be a good idea. What you have to remember though is that all the miles you racked up during your business trips, don’t necessarily get you a ticket to visit your family for holidays. What can get in your way are blackout dates, that is specific dates in the calendar year (usually times of increased air travel) during which you cannot redeem your miles or frequent flyer points. So, if you’re considering a credit card with rewards for travel, you may want to first check if you’ll be able to redeem those miles during the dates you wish.
Credit card rewards programs may be a great way to get some of your money back for the purchases you’ll make anyways. That being said, don’t sign up for the first rewards credit card you find. Shop around, consider your options, and keep in mind the six things described in this article before you make your slection!
Written By: Konrad Kociszewski
Special For: Easy.Credit