Money for the Rest of Us

Rewards credit cards make sense for a lot of people and are becoming more and more popular. But, with all of the options out there how do you choose one?

Here are seven things to consider when choosing a rewards card:

1. Your Personality: Is having a rewards card going to encourage you to spend more? This seems like a silly question, but I know people who justify their spending by saying “this really cute sweater is $100, but I get 5% back; so it’s like it’s on sale.” If you are going to do this, please stop reading now and don’t get a rewards card. A rewards credit card should be used in place of your current credit card for expenses that you already have, not to justify new expenses.
2. Your Credit History: Do you have a solid credit history? If you don’t you may not qualify for the benefits (such as a low-introductory APR) for a rewards credit card. Also, do you pay off your credit-card in full every month? If not, you may want to stick with a low-APR non-rewards card.
3. Non-rewards Perks: What non-rewards perks does the card offer? Is there a low (or 0%) introductory APR? What about balance transfers? Which of these do you need? Do you get some sort of cash back or gift after your first purchase with the card?
4. Type of Reward: What kind of reward do you want? Do you want a cash back rewards card? Or one where you can earn miles? Or do you want to earn gift certificates? There are many different types of awards; you should choose the one that best fits your needs.
5. Where you Spend your Money: Some rewards cards give you higher percentages back if you spend money at gas stations, grocery stores, or restaurants. Others give you more back for money spent at drugstores, convenience stores, or on utility bills. Still others give you a flat rate on anything. Look at a few old credit card statements and see where your money goes. Choose a card that fits your spending habits.
6. Card Limitations: When do you get the reward? Whenever you earn enough points or only once a year? Is there a limit to the amount of points/dollars you can earn in a year? If you earn airline miles are there blackout dates?
7. The Fine Print: As always, when considering credit cards, read the fine print. Is there an annual fee? If there is, DO NOT get the card. There are plenty of wonderful cards out there that don’t have fees. What about other fees? What will the APR go up to after the introductory period?

There are many websites that offer a side by side comparison. Do a Google search for “Credit Card Rewards” and go to a few of the websites that come up. Bankrate.com is also a good source for comparing credit cards. A non-internet place to find good deals is in the Parade or USA Weekend magazine in your Sunday paper. Chase Bank often advertises rewards credit cards in the magazines that have higher percentages cash back than you can find online.

The final and most important thing to do when choosing a rewards card is to take the time to make good comparisons. The card you choose should be one that you will stick with for awhile.

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