How to Choose Reward Card Program

Here's how to pick the perfect credit card reward program...

Credit card companies compete for your business with hundreds of different reward programs. Today's reward cards include bonuses such as airline miles, cash back, merchant rebates, gift cards and more. We'll show you how to sort through the offers and choose a reward card that's right for you:

Expect Rewards!

Reward cards are no longer the exception-- they're the rule! Reward cards are growing in popularity and almost every credit card issuer offers some type of reward program (even with their most basic credit cards). Here are the main factors you should consider when you choose a reward credit card:

Your reward preference
Reward percentage
Loyalty to a company or merchant
Interest rates and fees
Other considerations

Reward Preferences

The first factor you should consider is what type of reward you'd like to earn. Obviously, you don't want your rewards to go toward free airline tickets if you're afraid of flying or don't travel much.

For most people, the easiest reward to take advantage of is cash back. With this type of program, you're issued a check at certain times of the year or when you've accumulated a specific amount of rewards. Rebate programs work very similarly, except you receive an account credit vs. a check. If you like the option of shopping with gift cards, then a point system would be more attractive and most airline and retail credit cards use this type of program.

Reward Percentages

How quickly you can accumulate rewards depends on the percentage paid back on purchases. Typically, cash back credit cards offer 1% - 5% cash back. Points plans offer between 1 and 3 points for every dollar you spend. Obviously, the more rewards you can earn with a specific credit card, the more beneficial it will be and the more attractive it is when trying to choose an offer.

Also, look for introductory incentives that may include bonus points, or a bonus period when you'll earn a higher percentage of points.

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Loyalty to Specific Merchants / Companies

If you do a considerable amount of shopping at particular merchants such as WalMart, Target or Sears, using one of their signature cards-- or choosing a reward card that pays higher bonuses at these locations will reap huge benefits. Not only will you get redeemable points or cash back, but reward bonuses, discount coupons, special offers and other promotions.

Loyalty can play an especially significant role when choosing an airline credit card. Many airline cards allow you to earn frequent flyer miles on any major air carrier. But if you fly exclusively with one airline, you can get much higher bonuses by choosing their exclusive airline credit card.

Be Aware of Interest Rates and Fees

Be aware that reward credit cards tend to have higher interest rates, and may include additional fees when compared to 'standard' credit cards. If you payoff your balance each month, interest rates will not be a problem since no charges will accumulate. But if you carry a balance-- be careful. The perks of using a reward credit card can quickly be swallowed up by high interest and fees.

To make the most of any reward program, always look for the lowest APR. If you have a choice between multiple 0% APR offers, choose the one with the longest intro period. Also, look for offers that have no annual fee.

Other Points to Consider

Reward Limits / Caps : Most people won't have a problem with reward limits, but those with access to extensive credit accounts like business owners may lose out if they aren't aware of the cap. Be aware of annual caps or limits on rewards when you choose.

Rewards Expiration: Use them or lose them! Many reward programs have expiration dates on their rewards. Look for offers with no expiration dates.

* See our section on Reward Credit Cards for a complete list of offers! *