August 6th, 2012
5 Tips for Picking the Right Rewards Credit Card
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Here are five things to pay attention to when picking a great rewards credit card.
Rewards You Can Use
One of the biggest mistakes you can make when searching for a new card is to choose one that gives you rewards that you won’t actually use. What’s the point of racking up airline miles if you’re terrified of air travel? Instead, focus on those rewards cards that will get you what you want, whether it’s cash back—like Blue Cash Everyday Card—hotel perks or special event offers.
Interest That Doesn’t Eclipse Rewards
Cash back is great, isn’t it? But if you tend to leave a balance on your credit card from month to month, and your interest rate is sky-high, you’ll likely pay more in interest than you’ll receive in cash back. That rewards card just turned into a regular, boring credit card, didn’t it? The best thing to do is to set a precedent that you’ll never leave a balance on your credit card. Alternatively, do the math to make sure that the cash back rewards you receive each month is more than the interest you pay. Or choose a rewards card with a lower APR, like the Discover It card.
The Annual Fee
Don’t get me wrong, paying an annual fee can be worth it if you’re getting amazing rewards. But for some cards, even a low annual fee can cancel out the benefit of rewards. If you’re not sure if you’ll be able to rack up enough rewards to warrant paying an annual fee, get a card that comes fee-free, like the Capital One Cash Rewards card.
Revolving Cash Back Categories
Some of the best rewards cards offer 5 percent cash back on your purchases. The catch? You have to make sure you enroll in the seasonal category before the deadline. These big-bucks categories typically change each season, so to maximize your rewards, you have to be paying attention. If you choose the Chase Freedom Visa, make sure to mark on your calendar when it’s time to enroll in the next cash-back category.
Get ‘em while they’re still here! These offers usually include bonus cash back after you spend a certain amount. The Blue Cash Everyday Card will get you $100 extra if you spend $1,000 in the first three months. However, the cards that give you the best bonus offers usually require a higher credit score for approval. For instance, according to Credit Karma data, the Blue Cash Everyday has an average approved credit score of 732. Check Credit Karma’s credit score approval data before you apply for a big-bonus card.
Disclaimer: Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the card issuer. This site may be compensated through some of the included links.
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