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Research: Analyzing and choosing the right credit card rewards -

All card companies compete for a share in the pie and will go to any lengths to offer bonuses and rewards in order to entice the customer to sign up for their rewards card. There would be cashback rewards offered on usage of the card. In such cases low introductory rates would be done away with in order to increase spending.

Consumers are normally at a loss when it comes to making comparisons or analyzing before choosing the right card. For instance, if one card company offers 1% and the other offers 2%, one would obviously go for the 2%. This will not necessarily be the right choice in the world of earning points as there are always two sides to a coin which is earning points and spending them. Most often one would endlessly focus on earning points assuming that they will encash them later, but that rarely happens. Most often cardholders end up accumulating rewards points and rarely redeem them. Some of them feel good just looking at the rewards points that they have accumulated.

Rewards programs are structured to suit each one's needs. So, one has to choose the card with the appropriate options. For instance, a person who travels extensively would benefit from travel rewards.

There are basically 3 options for a person to choose from:

• The cash option - here a percentage of cash is given back on all the purchases made in the card. This may be in the form of a check and after accumulation of a certain sum or this might come as statement credit.

• The points earned - this entirely depends on the spending patterns (which is usually 1 point for every dollar spent). However, there might be different categories where one might earn more than one point. One can comparisons and calculate one point as equivalent to one cent.

• Earning air miles - for this again one could calculate one mile per dollar spent and miles are given depending on the spending. It works like the points card but the air miles earned can only be redeemed on travel.

One could accumulate rewards such as cash, miles or points. Some cards such as the travel credit cards offer bonuses on new accounts where one can earn 25,000 or about 50,000 miles after spending certain sums within the stipulated time period. One should be aware that travel cards come with a high annual fee and this bonus that these cards offer are basically to offset that fee in a way. Other rewards might be a 5% earning on gas filled at specified gas stations or while making purchases at a supermarket. Sometimes certain cards can put a cap on the rewards that one can earn in one billing cycle. Customers have to watch out for that, as this could have a huge impact especially if all purchases are made on one card. Some cards offer sweeteners in ways that are not related to spending. For instance, certain cards would give away 100 thank-you points per billing cycle if one stays under the credit limit and pays bills on time.