Reward Cards

With the numerous choices you have in credit cards it pays to know what each of the types of credit cards are and what they can do for you. Here we will examine reward credit cards, and the advantages and disadvantages of the cards. Reward credit cards offer you incentives for using your card. There are typically three ways credit card companies offer rewards. You have points, cash back, and mileage.

Each credit card company has a specific way that they do things. They do not offer you all three rewards on one card. For example if you have a frequent flyer miles card then you will earn mileage points. If you have a cash back card you will see a pound amount that accrues. When speaking of the rewards you already know one of the largest advantages of the card. The advantage you choose needs to be based on what you will use the card for.

If you use the card for all types of purchases and fly often, then a frequent flyer miles card will be the best. However, if you shop for school products cash back or points towards discounts might be a better option.

There is usually only one real advantage to the reward credit cards- the rewards. Some of the credit card issuers may offer you a purchase introductory rate with zero percent interest for three to six months. Other rewards cards may offer you points or miles for a balance transfer. Keep in mind that not all cards will provide introductory rewards, but that is one advantage to look for in the reward credit cards category.

Disadvantages of the credit cards are plentiful if you do not know how to use them. The biggest disadvantage to rewards credit cards is not understanding how you are actually awarded the benefits. Before you apply for the credit card ask the company how they calculate the rewards. If they do not know or will not explain it then that card probably isn’t for you. They should be willing to offer that information or tell you where you can find it on their site.

Most point rewards are provided on a sliding scale. This means you might not get the same amount of points for products as you might on others. Typically you have to spend 5,000 pounds or more per year to have the rewards cards do you any good. Many of the rewards cards tell you that 1 percent of your purchase will be the amount you earn in cash back. With points you may have to spend one or two pounds to get a point. The point system is easier to understand than the cash back.

Like all credit cards there are late fees, missed payment fees, balance transfer fees, and other charges that can be a disadvantage to you. When you pay the card off each month the rewards credit card will work better for you. This is because you will not be paying interest if you do not carry a balance.