Reward Credit Cards
Reward credit cards are not a new concept – they have been available to clients with a good credit rating for decades – but the variety of reward credit cards available, and how they are now tailored to cater for practically every conceivable type of credit card user, makes it worth shopping around to ensure you receive the full benefit from what is available.
How Reward Credit Cards Work
Credit card companies are keen to have your business when you are a person who has a good credit rating, and will offer numerous attractive plans in their marketing to encourage you to sign up with them. One such plan is a “Rewards” program – a plan which enables you to earn loyalty points on purchases made with your credit card that can subsequently be redeemed for gifts, cash and air miles.
Companies that offer reward credit cards will often “weigh” the points awarded on credit card purchases so, for example, you may find you receive additional points for paying for your gas with a rewards credit card, buying your groceries at selected stores or purchasing goods and making travel arrangements through the credit card company´s own online mall.
How Best to Use Reward Credit Cards
The best way to use reward credit cards is to make as many of your regular purchases as possible with your rewards credit card instead of using cash or other payment methods. If you are in a position whereby you are able to clear your credit card balance every month, the rewards that are being offered to you are effectively free (although you should be aware that some retailers may charge a premium for processing a credit card transaction and negate the value to you of using your reward credit card).
With this principle in mind, if you have large purchases on the horizon such as a holiday, wedding or even buying a new car, you should still save up for your purchase, but make the payment(s) with your reward credit card and use your savings to clear the account at the end of the billing cycle. Sadly, credit card companies are wise to the idea of using reward credit cards to draw cash advances and then using the cash to pay your credit card bill, and will not allocate reward points for these types of transactions.
Top Tips for the Best Reward Credit Cards
- Find the best reward credit card deals which reward you for shopping in stores you already frequently use.
- Choose reward credit cards which have no expiry period for the reward points you collect. This will enable you to save your points for better rewards.
- Do not make additional purchases with reward credit cards simply to collect points – if you want a gift that badly, buy it with your reward credit card.
- Check the annual fees and interest rates being charged on the reward credit card. What the credit card company may be giving you with one hand, they may be taking with another!
- If you are in business, search out the best business reward credit cards. They may have a significant effect on your profitability!
- Take advantage of reward credit cards which offer a sign-up bonus. These special offers will kick-start your reward points collection.
- Aim the find a reward credit card which offers you the choice of gifts, cash back and air miles. If you cannot find one card that provides it all, use multiple reward credit cards.
- When you subscribe to a new reward credit card, do not cancel your old card (particularly if it has no annual fee). Cancelling credit cards may negatively affect your credit rating.
- Don´t be dazzled by a glossy brochure and remember to read the fine print. There is no point getting a gas reward credit card if you have to drive 50 miles to get to a qualifying gas station.
- Shop around for the best reward credit cards for your lifestyle and then ask for more. Credit card companies want your business, so you just might get it!
There are many excellent reward credit cards available and often you do not need the best credit history in the world to be accepted for one. Bear in mind however, that applying for a credit card which you are unlikely to qualify for may negatively affect your credit rating. Therefore, within your selection criteria, aim for reward credit cards which offer a pre-qualification option or speak directly with the credit card company before applying.