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Today the financial market is highly competitive and banks are coming with innumerable ideas to ensure they attract a lot of customers. One of the ideas that have been working wonders for the past few years for the banks is the rewards credit card. Rewards credit cards are nothing but cards that come with attractive rewards associated with them. Unfortunately, people notice just the rewards being offered and not the fine print that governs the redemption of these rewards. Before you sign up for these cards, there are some basic facts that you need to be aware of in order to make a well informed decision that you will not regret.
Rewards credit cards come with a plethora of offerings. You can redeem the points you accumulate by using the card for your purchases for a variety of things ranging from gift cards to air miles. There are so many types of cards offering various gift programs that you might find it tough to choose from if you don`t have clarity on your expectations from the card. Opting for an air miles rewards card if you are not a frequent traveler is an absolute waste of money. Hence, think well and make your choice.
The second point about these cards that you should know is that the rate of interest and fees associated with these cards are different from the standard cards. In most cases, the annual percentage rates and annual fees on these cards are much higher than the standard ones. Even the financial charges for the transactions made can vary from one reward card to the other.
The third point you should know about these cards is that you will have to use this card for the purchases you make in order to accumulate points that can be redeemed at a later point for the reward of your choice. In most cases, you will have to spend up to a particular amount in order to be able to claim the gifts promised to you by the bank. Also, there is a time period associated to claiming the reward. If the time period elapses, you lose out on the points you have accumulated and hence the rewards too.
There are advantages as well as drawbacks associated to the cards under this category. Consider the pros and cons and then sign up for them. Most often than not, people who ended up opting for these cards have succumbed to the pressure of high interest rates and fees and have fallen prey to huge debts.