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Research: Do credit card rewards really make a difference? -

Credit cards seem to be with every single person these days, irrespective of whether they can afford it or not. Life has become very difficult without credit and it looks like the most popular choice of every American for payments. Dealing with your credit and what you owe is no easy thing, you need to plan it out properly and deal with whatever comes your way carefully. People most often take up credit cards with rewards or gifts and are thrilled at the points adding up. Often in the rush to claim points and rewards they miss out on important aspects like the interest rates. Of course the interest rates on reward cards are high. If you want to work things out and be able to shop conscientiously you have to plan how you use the reward card.

There are different kinds of reward cards in the market. The thing about these cards is they are designed for a specific audience. Therefore unless the feature suits you, it is best that you steer clear of these cards than use them. It will only results in high costs and no money in your pocket if you do not use these cards right. A reward card comes with various interest rates and unless you know what rates are there on it, and if there are additional fees then you will not be able to determine how much you owe. Some reward cards are exclusive high end ones made for the rich and famous. With high interest rates and large annual fees, they are for the privileged few and come with exclusive benefits like special discounts, upgrades on flights, invites to private parties, special deals on shopping and more.

There are also the regular reward cards for the average family. Some may add up points on gas miles and offer you gift coupons for redemption at select stores. Now having a gift coupon is a good reward, but it is worthless if it is at a store you do not like or never buy from. Thus most people prefer reward points rather than gift coupons. There are also special reward cards for business. For these people the amount spent is much more and also they have larger reward schemes such as hotel stays and holiday deals. They can also get points to redeem on flights which can be used to buy a ticket on any flight and discounts at select participating hotels. Business cards can be obtained by individuals as well and will help to keep track of budgets if you have regular and large transactions happening.

Credit cards with rewards also come with cash back offers. These are very popular among shoppers and some also like to use the cash back to put it into a 529 account directly allowing for investments to be made simultaneously. These cards come at a steep interest rate often and if it is beyond your budget, it is wiser to steer clear of it till you are sure it is affordable.