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Research: Five useful tips while choosing credit cards with rewards -

There are a good number of rewards programs in credit cards and each credit card has at least one type of reward in order to attract new cardholders. Since customer have a chance at getting rewards they feel encouraged to use the credit cards even more often in order to get bigger and better rewards.

You must be very careful while choosing rewards credit cards as these are essentially traps and you might end up in a cycle of bad debt if you are not careful enough. In order to make the most out of your credit card rewards you must follow these useful tips:

  • Never keep chasing rewards and charging purchases onto your card simply to earn rewards as this can prove to be risky in the long run. Never spend on the card with the sole purpose of earning points. Instead, you can use the credit card to pay the important utility bills and you will get rewarded for that.
  • There are caps on the rewards that you can earn during a particular period which may be monthly, quarterly, or annually. Hence, it is important to understand the limits because once you reach the cap you will stop earning points irrespective of how much you end up spending using your reward credit card.
  • Sometimes just owning a rewards credit card is not enough and you will have to register for the rewards program. Hence it is important to ‘opt in’ or you may never qualify for the maximum points that you can earn from the purchases.
  • Just earning reward points is not good enough and you must ensure that you redeem them as well. You may exchange the rewards points for gift, cash, merchandize, or cards. When you know it is time to redeem the rewards, ensure that you evaluate your options to get the maximum value.
  • Never allow your rewards points to go a waste. There are rewards cards where you may carry your unused points into the next period. This way the points will not expire. But, there are certain reward credit cards which have a time limit for redemption. In such cases, if you don’t redeem your points by the end of one year you may end up losing all your hard earned points. Hence, it is better to be aware of these expiration dates if you are a reward card holder. This way you will remember to redeem your points on time.

These rewards programs are a great idea as you can get rewarded with cash-back, air miles, merchandize etc. However, you must know that these rewards cards generally carry a higher interest rate and these are essentially meant for those people who travel a lot. But whatever the case may be, you must be careful while choosing your rewards cards and you must go through the fine print carefully. It is important to shop around for the best rewards cards and you must also go through the terms and conditions before choosing the card.