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Choosing Credit Card Rewards

Nov 1, 2007
As major credit card issuers compete for customers, credit card rewards are ever plentiful. Today's card holders can enjoy free sky miles, hotel and travel points, cash back for purchases, even money contributed to an IRA or transferred to a interest accruing savings account.

But which credit card reward is better? Points or cash back? Main contributors are the interest rate offered to card applicants based upon their credit scores, as well as the fine print regarding how to earn; and redeem, points and cash back.

When choosing a credit card rewards offer, decide what you desire most and which you can generate the most rewards. Since computing points is often confusing, many consumers choose a cash back credit card instead of a points card. With a cash back card, they know exactly how much money they will earn, and redemption is far easier. Even consumers who travel frequently will often prefer a cash back credit card instead of a points card for that very reason, plus because they have more flexibility on how; and where, to use the cash back. They don't have to worry about point blackout dates, nor restrictions to a specific airline or hotel.

Another problem consumers face when choosing a rewards card, are card fees and whether or not they will payoff balances in full each month. Otherwise, fees and interest could be more costly than the cash back and points accrued.

For consumers who do not frequently travel, and those who do not patronize a particular airline or hotel, Credit Federal suggests a cash back credit card versus a points card. Some airline miles cards are limited to a particular airline, and may have restricted travel dates. With cash back rewards, not only do you know exactly what amount your earnings will be per purchase, getting and spending your cash rewards is much easier and more flexible. You can view various credit card rewards offered by major issuers; including American Express, Chase, Citi, Discover, Visa and MasterCard at Credit Federal.

Consumers desiring reward credit cards also face the scrutiny of a credit check. Typically the greater the rewards offered, the higher the credit qualification. Bad credit people are considered a high risk and generally do not qualify.

Before you submit an application for a rewards credit card, consider these tips:

To maximize your rewards, payoff balances in full each month. If you cannot payoff balances in full monthly, select a card with the lowest possible interest rate.

Check for rewards caps to see if there are restrictions on the amount of points, etc, you can earn.

Find a rewards card with no annual fee. Otherwise, the fee you pay may be greater than the rewards if you do not use the card frequently enough, or not effectively.

Avoid cards with reward expiration dates.

Avoid short-term, introductory only card rewards.

Browse for perks. Some rewards cards offer free perks such as travel insurance.

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