Credit Cards Offer Rewards

By Author: Alisdair Cosgrove
Total Articles: 184
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The rewards a cardholder is eligible to receive from the credit card's issuer, are presented according to the number of purchases the cardholder makes with the card. Some of the most popular credit card rewards are air miles and discounts off the cost of flights offered by certain airlines, however, the variety of rewards that are available is quite numerous. It is possible to earn discount points toward the purchase of a new car, and there are some retailers and stores which offer you loyalty rewards for using a card issued in their name.

However desirable some of the rewards offered by the credit card providers might be, you should question whether or not these rewards are worth spending your money to obtain them. If you make a comparison of the interest charged on purchases made with the cards that have rewards and the ones that do not, you can easily answer this question for yourself. Even if there are many credit cards which offer rewards or loyalty bonuses, the lowest rate of interest on these cards is most often around 15% APR. This interest rate is about 7-8% more than you would have to pay for a basic low-interest ...
... credit card and much more than the zero percent interest rate included with an introductory offer on some other credit cards. When you examine the whole assortment of credit cards offering rewards, you will find that the interest rates on some will be well over 30% APR.

If you are a regular credit card user who earns some rewards by paying interest at these kinds of rates, it may worthwhile for you to consider choosing a much lower interest credit card which does not offer rewards. If you are the kind of credit card user who always tries to pay off the whole balance on the card before the payment is actually due, and you never pay any interest, the rewards for using your card are genuinely free. You may want to consider the alternate choice of the cash-back credit card if you are not sure you can keep up with the discipline of paying off the whole balance of your credit card each month. The way the cash back credit card works, is to pay cash back to the card user in accordance to what is spent on the card each month; this is also the same basic working principal of the credit cards that offer rewards.

The best cash-back rate is currently running around 5% on spending that attracts almost 19% APR in interest, so it is easy to see that you will still be paying quite dearly for the use of the card. If you are in the habit of repaying outstanding balances each month to avoid having to pay interest, you will be able to pocket this very welcome 5% cash back.

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. It could be of benefit to your finances, to use the credit cards which offer you some cash back or rewards and you consistently repay the balances on them each time to avoid the interest charge.
Alisdair Cosgrove is a freelance writer specializing in personal finance. You can read more of his work at www.JSNet.org for best credit cards and also offers a comprehensive list of airline credit cards.