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The pros and cons of using reward credit cards

Updated on July 15, 2011

Credit cards when used in a planned manner can really help you out of a difficult situation. For many people these cards are a way of life and often help them get out of situations where money is not at hand in bulk. When using rewards credit cards, ensure that you pick out those which will be useful to your usage. Not every card is made for you and not every card is the best one. Each individual has spending habits and lifestyles that make a certain card better for them on occasion. Understanding the credit card rewards is the first step to make the most of it.

Understand terms and conditions

Every credit card comes with its own set of terms and conditions. The more clarity you have on this, the better you can earn with it. Make sure you are aware of all the fees that are applicable on your credit card. If there is any interest rate changes that may be implemented following a certain introductory period, ensure that you know of it before it happens. This is why reading through the terms and conditions are important. Many people miss out crucial details because they did not spend enough time reading through things carefully.

For reward credit cards to be useful, you have to have an idea of how much you need to spend to start earning points. Cash back cards in particular may be tricky to figure out but make sure you spend enough time understanding it. Especially when considering reward credit cards consider choosing something that will offer you flexibility in redeeming the points that are earned. Many folks don’t understand this fact about reward cards. Also weigh if the rewards you earn are truly worth the amount you spend to earn them. If they aren’t you may be better off with a no rewards card with lower rates of interest and no annual fees.

Apply for a limited number

Companies will send you emails about many different kinds of reward credit cards. We are often tempted to try and apply for as many as possible till we get one that is most suited to our needs. However, applying for multiple credit cards will mean that you will be seen to be an unreliable customer by the credit bureaus. Only apply for those cards that you need and will use. Travel reward cards are often a great idea for large families that frequently fly. Check for multiple options in frequent flyer cards before making a final decision.


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