What are rewards cards?
Rewards cards are cards from stores, financial providers, restaurants, and services that offer you some sort of incentive for using them. It can be something as simple as a business card from your local salon that says “Get 5 haircuts get the 6th one FREE.” Here are a few examples:
What about that Kroger card? You may have seen coupons show up in your mailbox for Krogers. Those coupons were based on your shopping patterns at Krogers and then sent to you.
How about Toys R Us? There’s another rewards card, that I admit to using very frequently during the Christmas holiday season when I get a “cash back” return on my spending in the form of a coupon I can use later. Of course, cash back would be better!
One of the most frequently used rewards programs based on a card is those provided by service providers like Amazon.com or American Express.
What types of rewards can I get using my rewards cards?
There are a number of different rewards available to you, through reward cards. You may earn cash back on your purchases that you can apply towards the balance of your card. Maybe you get a “freebie” as a reward like a free flight based on your spending using the credit card. You may, like us get perks like Amazon credit (Amazon Chase Card) or cash used towards something specific (like our VISA where money credits earned go towards paying our time share fees). One local store gives me a 5% discount when I make a purchase and my card is with me. While specific rewards vary your spending habits can all add up to one thing, “freebies” or cash.
There are hundreds of rewards cards available to consumers. So, how do you select one? The most important factor to consider when choosing a rewards card is to get one you will really use. For example, if you don’t have a car then a rewards card that offers you benefits based on your gasoline purchases isn’t going to be of much benefit to you. But if you do drive, and spend quite a bit on gas (which is easy to do with gas prices currently at almost $4.00 a gallon) then this type of card may be the perfect choice for you.
Payouts for rewards cards may vary, some are monthly, some are based on a specific spending cap and some are paid yearly. Be sure to read the fine print to find out when you are eligible for your rewards program.
The most important think about using a rewards card is not just selecting one that you will actually use but paying it off. This should be done each and every month that you have your card. With interest rates being what they are, your “freebie” or cash back may not be worth what you a paying in the form of fees or interest for this particular credit card. For example say it’s $25.00 to apply for the card and after using it you don’t pay it off, now you have interest charges on an average of 14-21%. If you continue paying on a hefty interest rate your rewards may not be quite so rewarding.
As always your credit card use and spending should be responsible and paid off in a timely manner. Rewards cards can help you with an incentive to make sure you do both those things while paying you for doing so.