Credit Card Rewards Are Popular
Credit cards which offer “rewards” do this by keeping track of the number of purchases the cards involved are used on. The credit card rewards offered come in an almost endless variety with some of the most popular ones being gasoline credit cards, air miles and discounts off the costs of flights.Many stores and retailers also offer “loyalty” rewards if you are using a credit card issued in their name, while some credit cards give you the opportunity to earn discounts on the purchase of a new car.
The rewards offered by credit card companies can be very desirable to have, but you should ask yourself the question as to whether they are worth you having to spend your money to get.To be able to answer this question, it is necessary to look at the rate of interest applied to purchases made with credit cards that offer rewards and compare them to those without rewards.The lowest rate of interest on this type of credit card is usually about 15% APR even though there are several cards that offer some kind of loyalty bonus or reward.
This interest rate is much more than the zero percent interest rate included on the introductory offers of many other credit cards and about 7-8% more than the interest rate of most basic low-interest credit cards.When you examine the whole assortment of credit cards offering rewards, you will find that the interest rates on some will be well over 30% APR.
If you are a regular credit card user who earns some rewards by paying interest at these kinds of rates, it may worthwhile for you to consider choosing a much lower interest credit card which does not offer rewards.The kind of credit card user who pays off their total card balance before the payment due date will not have to pay interest, will actually receive the rewards for using their card for free.
If you are not sure if you can maintain the discipline of paying off the total balance on your credit card each month, then an alternative worth considering is the cash back credit cards.The cash back credit card pays back a cash amount according to a certain percentage of what has been spent on the credit card each month, and this makes it function much in the same nature as the reward credit card.
You will be paying an excessive amount for the use of a cash back credit card, if the amount you spend attracts the 19% APR in interest and the current best cash back rate is somewhere around 5 percent on the spent amount.If you are in the habit of repaying outstanding balances each month to avoid having to pay interest, you will be able to pocket this very welcome 5% cash back.
If you intend to maintain a strict personal practice of repaying your balances every month to avoid paying interest, it may be a wise practice to use the credit cards that have cash back and rewards attached to some of them.It could be of benefit to your finances, to use the credit cards which offer you some cash back or rewards and you consistently repay the balances on them each time to avoid the interest charge.