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The Best Rewards Program Credit Cards

Wednesday, May 29th

What Are the Best Credit Card Rewards Programs?

Reward program credit cards are a popular type of credit card that offer users the ability to earn rewards for their spending. These rewards can come in the form of cash back, points, miles, or other perks. In this article, we will explore the various features and benefits of reward program credit cards, including the different types of rewards, how to maximize rewards, and some of the potential downsides.

Types of Rewards

Reward program credit cards offer a variety of different types of rewards that can be earned through regular spending. Some of the most common types of rewards include:

  • Cash back: Users earn a percentage of their purchases back in the form of cash.
  • Points: Users earn points for every dollar spent, which can be redeemed for various rewards.
  • Miles: Users earn miles for every dollar spent, which can be redeemed for airline tickets, hotel stays, and other travel-related expenses.
  • Merchandise: Some credit cards offer the ability to redeem points for merchandise, such as electronics, appliances, and other goods.
  • Statement credits: Some credit cards offer the ability to redeem rewards for statement credits, which can be used to offset the cost of purchases made on the card.

How to Maximize Rewards

To get the most out of a reward program credit card, users need to take advantage of the various ways to earn and redeem rewards. Here are some tips for maximizing rewards:

  • Choose the right card: Look for a card that offers rewards in categories where you spend the most. For example, if you travel frequently, a card that offers miles for every dollar spent on travel may be a good option.
  • Use the card for everyday purchases: The more you use the card, the more rewards you will earn. However, it's important to avoid overspending and accumulating debt.
  • Sign up for bonus offers: Many credit cards offer sign-up bonuses for new users who spend a certain amount within the first few months of opening the account.
  • Take advantage of special promotions: Some credit cards offer special promotions throughout the year that offer extra rewards for certain types of spending or at specific retailers.
  • Pay off the balance in full each month: To avoid interest charges, it's important to pay off the balance in full each month.

Potential Downsides

While reward program credit cards can be a great way to earn rewards for everyday spending, there are some potential downsides to keep in mind:

  • High interest rates: Many reward program credit cards come with high interest rates, which can be costly if the balance is not paid off in full each month.
  • Annual fees: Some reward program credit cards charge an annual fee, which can offset the value of the rewards earned.
  • Redemption restrictions: Some reward programs have restrictions on how rewards can be redeemed, which can limit their value.
  • Temptation to overspend: The lure of earning rewards can tempt some users to overspend and accumulate debt.

Reward program credit cards can be a great way to earn rewards for everyday spending. By choosing the right card, using the card for everyday purchases, and taking advantage of special promotions and bonus offers, users can maximize their rewards. However, it's important to keep in mind the potential downsides, such as high interest rates, annual fees, redemption restrictions, and the temptation to overspend.

As with any credit card, it's important to use reward program credit cards responsibly and within your means to avoid accumulating debt.

Choosing the Best Credit Card Rewards Program

For consumers that use a credit card for a lot of purchases, choosing the right credit card rewards program is very important.

Typically, credit card reward programs fall into one of three categories:

  1. Credit cards that reward users for everyday purchases (cash back rewards, airline miles, store gift cards and or other items)
  2. Credit cards with sign-up bonuses
  3. Credit cards that include benefits when you use them (for example, a 5% discount every time you shop at a specific store, free checked bags, and so on)

The first thing you should consider is what is your reward goal? Would cash back be the best? Are you planning on using a rewards program to travel? Knowing what you want out of a card is a good place to start.

It is important to continually evaluate your current credit card and your current spending habits. As your life circumstances fluctuate and credit card offers change, you may find there is different credit card rewards program that fits your lifestyle better than your current card. Though it is not advisable to switch credit cards frequently, taking a good look every few years at your spending habits and comparing your credit card rewards program to others is recommended. For example, a frequent flyer rewards program would benefit a traveler, but if their life circumstances change and they are not traveling frequently, they may find a card better suited for them. Another example would be if your income changes and you need a card with a lower interest rate or a card with a different type of rewards program. A general rewards card (cash back, gift cards etc.) is best for someone that does not travel often. If you like to travel, taking advantage with a card that offers airline miles can be a great option.

It's also advisable to limit yourself on the amount of credit rewards cards you use. Once you find a card that suits you best, fully take advantage of the rewards it offers. Most research shows that credit cards with reward programs increase spending. If you have too many cards you may be tempted to spend more than you can afford, making your rewards less than the interest you are spending. Interest rates are usually higher with credit cards that feature rewards program. Do not be scared off by higher interest rates or annual fees, as these can often come with better rewards. However, take the time to read the fine print and compare the reward programs of these cards. For those that are disciplined and pay the credit card off in full each month, they do not need to worry about the interest rates and there is little to no extra cost to receive their rewards.

Research how your rewards are redeemed before signing up for a credit card rewards program. No one should have to go to great lengths to redeem their rewards nor find out that rewards earned have expired. A best credit card rewards program should cost you the least amount of money, while offering the largest amount of benefits.

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