This post is sponsored by First Alliance Credit Union
Are Rewards Credit Cards Worth It?
One of the popular ways credit card companies entice potential customers is by offering rewards that range from airline miles to cash back to discounts at theme parks. The promise of getting a reward simply for using your credit card can be extremely appealing, but anyone who has ever dealt with credit card companies is aware that they’re not known for their generosity. This begs the question, are rewards credit cards really worth it?
Believe it or not, the answer is “yes.” Rewards credit cards have a lot of potential advantages for consumers. You do have to follow a few guidelines, however, if you really want to take full advantage of everything a rewards credit card has to offer.
Choosing a Rewards Credit Card
In order to get the most benefit from a rewards credit card, you need to get a card with a rewards program that is right for you. The first thing you should consider is if you’ll regularly be able to earn points toward the rewards the credit card company is promising. For instance, if you have a rewards credit card that only gives you points when you shop at a certain store, you’ll need to consider whether you’ll shop at that store enough to get any appreciable rewards.
In addition to whether you can accumulate enough points, you’ll also have to consider whether you’ll be able to use the rewards you get. For instance, if you have a credit card that gives you rewards in the form of airline miles, you’ll want to make sure you can use those airline miles before they expire.
Read the Fine Print
Once you’ve found a rewards credit card that will let you accumulate points for rewards easily and has rewards you know you’ll be able to use, your next step should be to look at the fine print. This is extremely important—a lot of rewards programs have terms and conditions they don’t mention in their initial offer. These may include:
- How long do you have to use the points you earn
- How to collect your rewards
- When you can collect your rewards
- Where you can use your rewards
However, reading the fine print won’t just let you know about the limitations of the rewards credit card. It can also alert you to some perks about your card that you might not have known. At First Alliance Credit Union, for instance, rewards credit card members can increase the number of points they get each transaction when they activate deals from select businesses, which can include Home Depot, Jimmy Johns, or Walgreens.
Don’t Ignore the Basics
While you’re reviewing the reward program a rewards credit card offers, don’t ignore the basic details of every credit card—the interest rate and the annual fee.
In general, you’re going to pay a higher interest rate with rewards credit cards than you would with traditional credit cards. If you don’t usually carry a balance on your credit cards, you won’t need to worry about this. On the other hand, if you know you tend to keep a balance on your credit card, the amount you’ll pay on interest will wipe out any advantages you get from the rewards program.
While you’ll always be paying interest on the amount you borrow, you can find rewards credit cards without annual fees. In fact, it’s best to avoid credit cards with annual fees completely if at all possible.
Adjust Your Expectations
When you finally select a rewards credit card that is right for you, it’s understandable if you have dreams about all the things you’re going to get back. However, you need to really think about what you’re getting back as opposed to what you’re spending. For instance, if a card automatically gives you 2% of each purchase you make, this means you’ll have to spend $100 in order to get $2 back.
This doesn’t mean you’ll never accumulate enough points to get any rewards, but it does mean you have to be realistic about how much you’re going to get back. In fact, it’s best to look at the rewards you get as a nice extra, as opposed to being a goal in and of itself. If you do that, you’re less likely to spend more than you intended and get into debt while chasing the next level of rewards.
Charge Everything to the Card
Once you’ve gotten your rewards credit card, the next step is to start using it. If your rewards credit card doesn’t limit where you need to spend in order to earn rewards, you should consider making it the credit card you use for most purchases in order to maximize its effectiveness.
One strategy you can use to maximize your rewards card is to treat it like a debit card. In other words, use it for all your expenses, and then log in to your online banking platform and transfer money from your checking account to your credit card to pay off all your purchases that evening. It’s worth pointing out that if you have a budget, this will be a lot easier.
Review Your Rewards
The final guideline to follow to ensure you get the most from your rewards credit card is to review the points you’ve earned for rewards on a regular basis. This is especially important since the points most rewards programs give will eventually expire. When you know how many points you have and how long you have left to use them will make sure you actually get to reap the benefits of the points you’ve earned.
Reviewing the points you’ve earned will also give you a chance to see if the rewards program has changed. Credit card companies have been known to add some new rewards to their programs, delete other rewards, and even change the points required to earn existing rewards. Having the most current information about what your rewards points can get will help you figure out the best way to put them to use.
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Get a Common Sense Rewards Credit Card at First Alliance Credit Union
Rewards credit cards can be very appealing, but you have to follow a few guidelines in order to get the most out of them. You have to select a rewards program that works for you and make sure that you can actually use the rewards the credit card company offers. Once you’ve selected the rewards credit card, you’ll want to charge as much as you can—preferably without racking up any debt.
If you’re looking for a rewards credit card with a straightforward rewards plan, get the First Alliance Credit Union rewards credit card. You get points on every purchase you make and exchange them for gift cards, airline tickets, merchandise, and cash back. Plus, you can easily keep track of your rewards either by logging into our online banking platform or opening our mobile app.
