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 It does not make for a good rewards card if all you can redeem your rewards points for is an outdated clock radio.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.

Credit Card Wisdom

Spending on credit cards can become a very large problem if you do not keep track of what you are doing. If a you have one credit card, it is easy enough for you to keep track of your spending. Additionally, if a credit card has a low credit limit, that limit will be a ceiling for your spending habits. Keep in mind that I am not suggesting that you use your credit card until you "max it out." I am merely suggesting that the credit limit, if low, will prevent you from getting too deeply into debt. However, a low credit limit is like a double edged sword because even though it will prevent you from charging too much, a low credit limit is looked upon with disfavor by lenders because it means that you either are new to credit or are not a responsible user of credit.

As I stated, if you only have one credit card, it is relatively simple to keep track of your spending. However, what if you have more than one credit card? Two credit cards should still be easy to track, but what about three, four, or even five cards? At what number does credit management become difficult? This is the problem that many credit users face.

Many people become seduced by credit cards. They get a feeling of power and start to abuse their credit card privileges. Abuse of credit cards is always a problem, but this problem magnifies when you have more than one card. Could you imagine the financial burdens that would arise if you had five credits and all had been abused? The point is, wise credit card use goes beyond the traditional good advice of paying your bills on time, paying more than your minimum payment, and keeping your debt low. Wise credit card use includes knowing when you are abusing your credit and knowing how to stop before the problem becomes insurmountable.

The best way to prevent credit card abuse is to keep track of your spending. If you do not keep track of your spending, you will soon discover that your credit card bills will start to spiral out of control. This is sad because credit cards should never be a cause for financial concern. Credit cards should only benefit your situation. Therefore, wise credit card use denotes that if your credit cards are not improving your financial situation, you are abusing your credit cards.

Use your credit cards wisely and you will reap great financial rewards.