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2/5/09

Comparing Credit Card Rewards Programs

Credit card rewards programs are great in that they reward you for credit card use. However, there are two important things you should know: (1) you should never pay for a card (via annual fees or a higher interest rate) simply because the credit card offers a rewards program; and (2) you should not charge more purchases or spend more money than you normally would simply because the credit card has a rewards program. If you can avoid these two common mistakes, your rewards card should by a nice addition to your credit card repertoire.

There are many different rewards cards from which to choose. Some rewards cards offer airline miles that you can redeem for airline travel, some rewards cards offer points that can be redeemed for anything from the latest electronic gadget to a ski resort vacation, and still other rewards credit cards offer cash back bonuses. Your individual tastes and needs should be the determining factors when deciding which rewards credit card you should obtain. However, before you make your decision, there are some things you should know.

If you want a travel rewards card, make sure that there are no blackout dates for travel and that the miles never expire. Additionally, make sure that the miles that you accumulate can be used for an airline that you actually use. It does not help your situation if your miles can be redeemed only on some unknown airline company.

In regards to rewards cards that offer strictly points that can be redeemed for a whole catalog of things, you have to again make sure that you would actually use your accumulated points on their merchandise. It does not make for a good rewards card if all you can redeem your rewards points for is an outdated clock radio. Also, as with the travel rewards card, make sure that your points never expire.

Of all the rewards programs available, many people choose the cash back rewards cards. I understand the appeal of getting cash back from your normal credit card use, but usually the cash back percentage is so small (usually one percent (1%) of your total purchases) that you have to spend a very large sum of money to actually receive something other than a nominal amount back. As such, I am not a big fan of cash back rewards programs. However, if you are a "big spender," a cash back program may be the right option for you.

The point is, use this information to decide which rewards program credit card you would like to pursue and do so by finding the best credit card that offers the rewards program that you want.

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