Credit Card Rewards Help You Save Money
Saturday, February 14th, 2009 Subscribe To Our Feed
When credit cards offer “rewards” to their cardholders, this is done according to the number of purchases the customer makes with the card. Some of the most popular credit card rewards are gas reward credit cards, air miles and discounts off the cost of flights offered by certain airlines, however, the variety of rewards that are available is quite numeous.Many stores and retailers also offer “loyalty” rewards if you are using a credit card issued in their name, while some credit cards give you the opportunity to earn discounts on the purchase of a new car.
The rewards offered by credit card companies can be very desirable to have, but you should ask yourself the question as to whether they are worth you having to spend your money to get.In an effort to answer this question it is helpful to compare the rate of interest charged on purchases made with cards that offer rewards with those that do not have rewards.There is a great number of cards which are offering some sort of reward or loyalty bonus, but the lowest rate of interest on these types cards is likely to be in the area of 15% APR.
This interest rate is much more than the zero percent interest rate included on the introductory offers of many other credit cards and about 7-8% more than the interest rate of most basic low-interest credit cards.When you examine the whole assortment of credit cards offering rewards, you will find that the interest rates on some will be well over 30% APR.
It may be worth reconsidering the choice of a credit card that has a lower interest rate and no rewards, if you are a regular credit card user who has to pay these higher interest rates in order to earn sufficient points for desired rewards.The rewards for using a credit card will be free to someone who pays off their total credit card balance each time before the payment due date, because they will never have to pay interest.
You may want to consider the alternate choice of the cash back credit cards if you are not sure you can keep up with the discipline of paying off the whole balance of your credit card each month.The cash back credit card gives back cash to you according what has been spent on the card each month, and the reward credit card also works basically in the same manner.
The best cash back rate is currently running around 5% on spending that attracts almost 19% APR in interest, so it is easy to see that you will still be paying quite dearly for the use of the card.If you are in the habit of repaying outstanding balances each month to avoid having to pay interest, you will be able to pocket this very welcome 5% cash back.
If you intend to maintain a strict personal practice of repaying your balances every month to avoid paying interest, it may be a wise practice to use the credit cards that have cash back and rewards attached to some of them.Your personal financial picture may be given a brighter focus when you are using these cards that offer rewards and cash back.
