One of the main reasons people want a credit card is the rewards they offer. If you are looking for a credit card, you might be asking yourself what is a rewards credit card? You might have heard of them or have a friend who uses them and gushes about them all the time. Evidently now you want to try them too. This article will provide the answer to the question what is a rewards credit card and how to use it.
Understanding Rewards Credit Cards
If you are considering a rewards credit card, you need to understand what is a rewards credit card. A rewards credit card will offer you incentives to spend money on the card. These cards will give you benefits for using them. You will earn a specific number of points for each dollar you spend on the card. The percentage usually ranges from 1% to 5%. Some cards only give you points on certain purchases.
If you want to learn what is a rewards credit card, here’s what you need to know. Rewards usually come in the form of cash, points, or miles. Cash rewards are the easiest to understand. You need to know what you can redeem the cash for, as some companies only allow you to redeem them for credit on your account. There are companies that will mail you a check. Others will deposit it straight into your checking account. In some cases, they will require you to redeem your cash for gift cards.
Another popular reward credit card is one that allows you to redeem for travel or miles. When you are researching what is a rewards credit card, look up travel rewards cards as well. With these cards, you will earn mileage with each purchase. When you obtain enough miles, you can redeem them for travel. The number of miles you can earn is different among companies.
Another trick when learning about what is a rewards credit card is deciding what you prefer. Do you want cash back to help you reduced the balance on your credit card, or traveling miles? Do you wish to use the rewards to purchase Christmas or birthday gifts for family and friends? Decide which card is right for you, so you can earn the best rewards.
One thing you need to know is that the best rewards credit cards require good or excellent credit. If you have a low credit score, you may not qualify for a good rewards credit card. In some cases, they might charge you an annual fee for rewards credit cards. Also, it is possible that cards with good rewards charge higher interest rates. Therefore, try to pay off your balance each month.
Keep in mind that some cards come with restrictions. Sometimes, your points will expire or there are travel blackout dates. The company could change their rewards without notice. Therefore, make sure you look over your statements. There are rewards cards which do not allow your rewards to expire. However, if you fall behind on your payments, they might require you to forfeit your rewards. Make sure you read the fine print in your agreement.
You might also like – What Are Unsecured Credit Cards and How to Use Them
How to Use Rewards Credit Cards
It’s not enough to know what is a rewards credit card. You also need some tips on how to get the most out of them. Here they are.
• Choose the card that best fits your interest
Rewards credit cards come in numerous types. Pick the card that suits your interest. If you are strapped for money, you might want a cash rewards card. You can pay down your balance, or you can use it to buy gas or groceries. If you travel frequently, find a good airline miles reward card. Don’t go for a rewards program that you will not utilize. You also do not want to get a rewards card that will get you into more debt. Do not spend money that you do not have just for the rewards.
• Compare cards
Do not be tempted to apply for the first card you like. There are so many rewards credit cards, and each of them has different terms, fees, and conditions. You need to put a lot of thought into it before deciding on a card. Take the time to compare offers. Know the annual fee, and be aware if your rewards expire. You can even find a card without an annual fee.
• Use one single reward credit card
One thing you need to know when researching what is a rewards credit card is that you can earn more rewards if you stick to one card. Do not try to rack up rewards on more than one card. You will end up earning less in rewards if you use several cards for rewards. Choose the card that has fewer fees and a lower rate. Keep in mind not to close out many cards at once, as it will hurt your credit score.
• Be aware of when your rewards expire
It is very important to read the fine print in your credit card agreement. Some rewards expire between 1 and 2 years. You want to make sure you use your rewards before they expire.
• Check your account
Credit card companies will allow you to monitor your account on their website. You need to check the site to make sure no unauthorized purchases are made on your account. You also need to check to see if there are any changes in the terms of the card. They have to notify you when the terms change. However, in some cases, you might not read the fine print of the documents they send you. Therefore, review the website and your account to see if there are any changes.
• Pay it off each month
Keep in mind that many rewards credit cards have a higher APR. If you carry a high balance, you will be paying a lot of money in interest. Do not spend more than you can pay. You do not want to get into debt with a high balance on your credit card.
You want to be familiar with the percentage of points you will earn. Some cards offer a higher percentage during a certain period of time. Make sure you know when you can earn more points and utilize it. Before applying for a card, you will need to know if the card offers any incentives when you are approved. You might get a huge number of points just for signing up.
Before applying, make sure you understand what is a rewards credit card. You also need to be aware of the terms and conditions of the card. Know what you are paying for and make sure the rewards are worth the cost. You can then apply for a rewards credit card, and you can redeem your rewards so that you can reap the benefits.