Saturday, March 17, 2007

Rewards Cards: Are They Worth It?

Virtually all consumers will have got a credit card at some point in their lives. Are this an understatement? Probably, as most consumers carry multiple credit cards. Selecting a credit card should not be something taken lightly; card companies are constantly looking for new consumers, but only after wisely comparing offers should you choose a provider. Pick a company that volition give to you a sensible rate and one that incentivizes their programme with some type of reward for using their card.

So, how make rewards cards work? Almost without fail, rewards cards typically give consumers money back on their purchases [usually 1-2%] Oregon allow you to collect points toward awards or price reductions on future purchases. If you charge $10,000. per twelvemonth [not hard to make if you charge your groceries] and your rewards card pays you a 2% reward on purchases, you will have $200. from the company. Usually you will derive the finances in the word word form of respective credits to your account spreading out over the course of study of a year, but in some cases you will have the rewards in the form of a check.

Rewards cards are free money, right? Only if you make not have got to pay an annual fee and you pay your credit card off every month. If you make not pay your card off every month, your reward could easily be overshadowed by monthly interest payments, especially if your interest rate is high. Not too many companies pay rewards and give you a low rate at the same time. In theory, even if you carry balances for as small as 2-3 calendar months before paying your card off you could happen your rewards for the full twelvemonth outweighed by finance charges.

When rewards are given in the word form of points that you later can deliver for awards or take price reductions on future purchases, you need to see the following when selecting your card:

1. Are the reward programme for something you cognize you will use? For example, if you are a member of GM's rewards program, are you certain that you will be buying a gram merchandise in the future? If so, travel with this card as the tax return can be as high as 5%.

2. Are there an annual cap on purchases? Many rewards cards will restrict to you the amount of cash back finances or rewards points you can collect in one year. Most people never come up close to the figure, but if you are a business traveler you can quickly attack and go through these restrictions within the year.

3. Bash points eventually drop off? The bulk of rewards cards only allow you to collect points for three old age before they get to drop off. If your adjacent car purchase is five old age away and you have got a programme that driblets off points, you could happen the first two old age of card usage to be a waste material as those points would vanish. If you still desire that peculiar rewards card, only utilize it in old age 3, 4, and 5 so that when it come ups clip to purchase your new car you will not have got lost any points. You could see getting and using another rewards card for a different rewards system to cover old age 1 and 2.

All in all, rewards cards can be a utile option for the savvy consumer. Remember, points make autumn off and carrying balances from calendar calendar month to month will pass over out the value of the card in short order. By showing plentifulness of subject you can do rewards cards work well for you.


Post a Comment

<< Home