When credit cards offer “rewards” to their cardholders, this is done according to the number of purchases the customer makes with the card. The variety of rewards offered by credit card companies is virtually endless, but some of the more popular rewards are gas credit cards, air miles or discounts off of the cost of certain airline’s flights.”Loyalty” rewards are being offered by some stores and retailers when a card issued in their name is used, and some credit cards make it possible to earn discounts toward the purchase price of a new car.
As desirable as these cards may seem to be, it is still necessary to question whether or not they are worth it.You can best answer this question by making comparisons between the interest rates on purchases made with credit cards that offer rewards and those cards that do not offer 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 do a comparison of all of the interest rates on the whole range of credit cards, it will show that some of them exceed over 30% APR.
A regular credit card user who wants to earn sufficient points for worthwhile rewards, but has to pay interest at these sort of rates, may find it to be worth giving serious consideration toward choosing a much lower-interest credit card which does not offer rewards.If you pay off the whole balance on your credit card before payment is due, the rewards for using the card are actually free because you are not paying interest then.
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.Similar in principle concept to the reward credit card, a cash-back card pays back cash equivalent to a preset percentage of whatever has been spent on the card each month.
Since the best current cash back rate is in the area of about 5% and the spending you do on the card attracts around 19% APR in interest, you will unfortunately end up paying quite a lot for the use of the card.If you have developed the habit of paying all of your outstanding balances each month to avoid paying interest, you can of course, put the 5% cash back into your own pocket.
Credit cards with rewards and their family members, cash-back credit cards can therefore, be worth it, when you are maintaining a personal policy of repaying the balance on your card, before it starts to attract interest.If you use the cash back and rewards credit cards in this manner you can put cash into your own pocket and accumulate the necessary reward points to help you acquire a wanted or needed item.
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