Wouldn’t it be nice to pay for dinner and getcash backto help offset your next night out?
Or score a “free” vacation usingpoints and milesearned from just paying for your everyday expenses?
With arewards credit card, you’re able to.
What is a rewards credit card?
A rewards credit card offers a return on the purchases you make in points, cash back or miles.
There are other ways to redeem rewards, such as fortravelor toward future purchases, depending on the card.
The primary use for a rewards card is to provide a return for purchases you make regularly.
Next, compare a card’s rewards rate and perks to its annual fee.
You’ll want to confirm the benefits you use each yearoutweigh the card’s annual fee.
A card’s welcome bonus,introductory APRand other features may factor into its total value as well.
Also, consider how you could redeem your rewards.
Cash back
Cash-back credit cards offer a straightforward return on your spending.
They usually have fewer redemption options and lower welcome bonuses but offer a simple approach to credit card rewards.
The cash back can be transferred to your bank account or applied to your credit card balance.
According to credit expertJulia Menez, it doesn’t need to be.
“You just need to know how to strategically time everything.”
It’s also wise to pick a card that matches how you spend, according to credit expertShonda Martin.
“A card with a good flat reward way rate might be a better bet,” Detweiler said.
Just be wary of the annual percentage rate on your rewards credit card, said credit expert Beverly Harzog.
That means it’s imperative that you don’t carry a balance on your rewards credit card.
“If you use cards strategically, it’s possible for you to save a lot of money.
But you have to be organized.
And you have to pay that bill every month when it comes,” Harzog added.
Is a rewards credit card right for you?
Rewards credit cards can be great for earning a return on your spending.
From there, you’ve got the option to determine what punch in of points you’ll need.
Debit cards won’t charge you an annual fee, either.
They also won’t offer as high a reward rate as credit cards.
Debit cards also won’t feature things like travel accident insurance or other protections.
The best strategy is to treat yourcredit card as a debit card.
That means not spending money you don’t have and paying off the purchases you make right away.
How to apply for a rewards card
FAQs
Are credit card rewards taxable?
Always check with a tax expert if you’re unsure about what to report on your taxes.
Do credit card rewards expire?
you could find out if yours will by reading the terms and conditions that come with your card.
Can you combine credit card points?
Some issuers let you combine points across multiple credit cards in the same family or brand of credit cards.
Be sure to check the terms and conditions of your specific card’s rewards program.
How can you compare cards that earn points and miles to other rewards cards?
Divide the cash value of your rewards by the number of points it costs to get the cents/point value.
Most issuers let you redeem cash back at 1 cent per point.
These rates may vary depending on the card, so check your card’s terms and conditions.
Is cash back better than points?
Cash back is a more accessible concept, but cash back and points both have their strengths and weaknesses.
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