May 8, 2009

Credit Card Rewards, Pt.4
  So, what’s the bottom line?

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Does anyone really benefit from rewards programs? If you do not pay your credit card balance off in full each month, such a card would most likely not benefit you. However, if you were in the habit of paying your entire balance each month, you would reap the rewards of this type of card. Individuals who pay their balance off each month are not affected by the higher interest rates because there should be none to pay. Additionally, if you are not likely to take advantage of the rewards you do earn, you have paid for nothing. Racking of points to apply toward travel may take some consumers years to earn enough points for an award’s certificate. Most likely, the points would expire long before the consumer has had an opportunity to reach that point. Therefore, opening an airline branded credit card would not be advisable. Likewise, if the credit card offered restaurant dining rewards while you seldom dine out, would be useless. Additionally, there are some reward programs that give the consumer the option of using their cash rewards to purchase products online. The downfall is the product usually costs more than if the consumer had purchased it straight out from a major retailer.

The bottom line is consumers need to be diligent in finding out what type of card best fits their unique lifestyle. Airline branded credit cards can be beneficial if you’re a frequent flyer; however, most airlines have blackout dates and a limited number of seats allocated to award tickets. If you drive a great deal, obtaining a gas credit card that offers a reduced price per gallon of gas would be a good fit. If you are on the road a lot, getting a card that offers points towards car rentals and hotel stays works well. Most importantly, if you generally carry a balance forward from month to month, finding the lowest APR is essential.

If you are determined to search for a rewards card, look for a cash back reward that has a variety of options. Use the online credit card search system to compare cards across a wide range of brands. Lastly, read the fine print. If something doesn’t make sense, call the card company to ask for clarity before making any decision.

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