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Reward credit cards offer cardholders a vast array of opportunities:
cash back, airline miles, gasoline rebates, hotel stays, retail
rewards and more. Although they tend to have higher interest
rates and often include additional fees, if used wisely, reward
credit cards provide tons of great perks for cardholders.
Who benefits most?
The best candidate for a reward credit card is someone
who uses credit regularly and is able to pay off
the balance in full each month. The biggest benefits, cash
rebates and other bonuses are earned when you can charge
without paying any interest. If you have no choice but to
carry a balance, a low APR credit card may be a more practical
and cost effective choice.
Choose the right card
If you think you can benefit from a reward credit card, the first thing you should consider when choosing an offer is whether or not the
card fits your lifestyle and how useful the rewards will
be. Here are the three major card types:
Cash back credit cards are the most popular type of reward
cards because their simplicity and practicality. Earn 1-5% on every purchase you make and
choose to receive a rebate check or have the cash applied
to the card balance.
Points credit cards offer a variety of rewards to choose
from, including merchandise, gift certificates and travel
perks. Some offers have limitations on redeeming your points.
Frequent flyer cards, sometimes referred to as travel reward or airline miles cards are particularly attractive
to business people and travelers. The amount of miles rewarded
varies by card offer, with many giving bonuses for travel
charged on the account. Travel reward cardholders redeem
miles or points for airline tickets, upgrades, hotel stays
and more.
Tips to maximize benefits
Here are four ways to maximize your reward earnings:
- Choose a reward credit card that matches the ways you
live.
Example: If you never fly, don't select an airline miles
card.
- Take advantage of the various bonus offers the card provides.
Example: Receiving extra points for shopping at ShopMart.
- Look for reward programs that have no limit on the amount
of rewards
that can be earned and do not have a expiration
date.
- Use your reward card for daily purchases that you'd normally reserve for cash. Set the money aside and pay the balance at the end of the month.
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