The credit cards which offer “rewards” do this according to the number of purchases the cards are used on.The rewards offered come in an almost endless variety and some of the popular ones are air miles and discounts off the costs of flights.It is possible to earn discounts on the purchase of a new car and some retailers and stores give you loyalty rewards for using a card issued in their name.
These rewards can be very desirable to have, but you should question whether they are worth it.You can answer this question for yourself by making comparisons between the interest rates on purchases made with cards having rewards and cards that do not have rewards.Even if there are many cards which offer rewards or loyalty bonuses, the lowest rate of interest on these cards is most often around 15% APR.This interest rate is about 7-8% more than you would have to pay for a basic low-interest credit card and much more than the zero percent interest rate on an introductory offer on many other credit cards.If a comparison of all of the interest rates of the whole range of credit cards is made it will show that some of them exceed over 30% APR.
If your credit card is one of those that has these types of interest rates and you are using it to earn enough points to get rewards you want, it may be a better idea to switch to a lower interest credit card and save money instead of reward points.The rewards for using a credit card will be free to someone who pays off their total credit card balance each time before the payment is due and never has to pay interest.Unless you are sure that you can pay off all of the balance on your credit card every month, you may want to use the alternative of a cash back credit card.The cash back credit card pays back in cash, a certain percentage of what has been spent on the credit card each month, so this makes it similar in principal to the reward credit card.
You will be paying excessively for the use of a cash back credit card when the amount you spend attracts the 19% APR in interest and the current best cash back rate is somewhere around 5 percent.{{{If you are in the habit of repaying outside balances and avoiding having to pay interest, you will be able to pocket this very handy 5% cash back|When you develop the habit of paying all of your outstanding balances each month to avoid paying interest, you can of course, put the 5% cash back into your own pocket|You will be able to pocket the 5% cash back on this card when you pay your total balance each month and avoid the interest charges|These interest charges can be avoided and the cash back can be put into your pocket if you are one of the consumers who is in the habit of paying all of your outstanding balances each month
If you intend to maintain a strict personal practice of repaying your balances every month to avoid paying interest, it may be a wise choice to use the credit cards that have cash back and rewards attached to some of them.If you use the cash back and rewards credit cards in this manner you can put cash into your own pocket and accumulate the necessary reward points to help you acquire a wanted or needed item.
Alisdair Cosgrove has been writing credit card articles for many years and can find more of his work at the UK site TheMoneyStop.co.uk, offering
interest free credit cards for UK residents and also a great selection of articles including '
are you paying for your cash back credit card?' and also '
different types of credit cards'.
