April 23rd, 2013

3 Signs a Rewards Card is Right for You

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3 Signs a Rewards Card is Right for You | Credit Karma Blog

Everyone remembers their first…credit card, that is.

I opened mine last spring and was instantly dazzled by its shininess and silvery cool reflection. My credit limit seemed like a ton of money back then. A few months later, when I learned that you should stay under 30% of your credit utilization rate, I began to feel a little restricted. So I decided if it was time to shop around, I might as well earn something from my spending and open a rewards card.

If you’re contemplating taking the rewards route, like I recently did, here’s how you can decide if a rewards card is right for you.

You spend a lot in bonus categories.

Rewards cards typically have a base level of 1% cash back or 1.5 points on all purchases. What sets them apart are the bonus categories. My new card, the online-exclusive Bank of America BankAmericard Cash Rewards, offers 2% on groceries and 3% on gas each quarter. I don’t own a car yet, but when I have a family, the majority of my expenses will be on groceries and gas. So I envisioned this card giving me a great deal for where I’m at right now and also being helpful down the line.

Some cards, like the popular Chase Freedom, rotate bonus categories every quarter. If you can get down with planning your spending around a bank’s schedule or if this gives you an incentive to finish that gardening project, the cash will add up.

But make sure to be mindful of your monthly balances. Sign up for account monitoring to be reminded when your bill is due, so you don’t end up paying interest that will you leave you with not much of a bonus at all.

You’ve got an itch that only traveling can scratch.

Sometimes you just want to pack up your bags and fly off on an adventure. If you often find yourself planning your next trip to Europe and taking cruises to the Caribbean, a rewards card can help ease the weight on your wallet. You can redeem points for all sorts of things you need when traveling, from hotels to car rentals. It’ll almost feel like you booked that flight for free!

Some great cards for explorers are the Barclaycard Arrival and Capital One Venture. The Barclaycard Arrival allows you to earn 2 miles per dollar on travel and dining purchases and carries no foreign transaction fees. With the Capital One Venture card, you can fly on any airline at any time, and your miles won’t expire. Intrigued? Log into your Credit Karma account to view your approval odds for these cards.

You want to get your money’s worth.

While spending money can be a thrill, it can also leave you with a sense of anxiety. I’ll buy a nice watch and think, “Crap, there goes my shopping budget for the month.” With a rewards card, you’ll feel a bit more empowered. You spend some money, you get some back. Whether it’s in the form of cash back or points, you’re taking back some of your hard-earned cash. And if you save up your points for a long time, they can make a big impact on your finances when you need to redeem them.

To get more bang for your buck, I recommend the Discover It card, which is pretty popular and one of the newer cards on the scene. In addition to 5% cash back on rotating categories throughout the year, you can enjoy a 0% introductory APR for 14 months.

If you fall into one of these categories and you’re in the market for a new card, consider opening a rewards card. They can be a useful tool in your credit-building arsenal, but remember: don’t spend just for the points. Take your time to savor each bite as your points add up. Then enjoy your rewards and lick the icing off the cake.

Charmaine

is a contributor to the Credit Karma blog. Before joining Credit Karma in February 2013, she constantly had to explain that social media marketing was a real job. When she isn’t writing her way through life, you can find her reading about the latest in entertainment, watching television, and advocating for libraries. Her favorite social network is Twitter. Say “hi” @noodlemaine!

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

7 Comments

  1. After I got out of $50,000 worth of credit card debt, I was scared of credit cards. I decided to jump back in and started using a rewards card and now I love it. I use it for everything each month and pay it off. I earn some good rewards each and every month.

    Grayson @ Debt Roundup at 3:18 pm on April 23, 2013
  2. When the bonus categories rotate, do you find yourself spending more in that category than you normally would/should than if you were able to just spend and earn bonuses naturally?

    Dona Collins at 8:04 am on April 24, 2013
  3. Thanks Charmaine for enlightening me with such ease! I am a bit of shopaholic (at least I think so!) and often find it difficult to manage with my monthly paycheck. Hope reward card would be rocking for me… thanks once again.

    Tomasz Gorski at 5:11 am on April 25, 2013
  4. Jenna

    Glad you liked it!

    Jenna at 9:27 am on April 25, 2013
  5. Chase Sapphire for rewards & Travel (yes it does have an annual fee after the first year).

    Pentagon Federal Credit Union VISA card – 5% cash back on gas pump purchases no limit, no conditions, all year around.

    Rotate with Chase Freedom or Discover More card (5% revolving categories)

    Done.

    Gregory at 4:43 pm on April 25, 2013
  6. Thanks for approving my comment. Keep up the good work.

    Tomasz Gorski at 4:13 am on April 26, 2013

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