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It is beyond doubt that credit cards have become an integral part of our lives and play an important role in our financial well being. There are a number of credit cards being offered by banks to customers eagerly waiting to apply for them. The most preferred category among credit cards is the rewards credit cards. Customers find this option to be alluring since they get rewarded each time they use the card. However, most customers fail to look beyond the rewards. The fine print on reward cards come with a lot of conditions that you should be aware of before applying for them. Let us take a look at a few factors that you need to take into consideration before filling out that application form.
Types of rewards
There are a variety of rewards offered by banks to customers. Some of the most common types of rewards are cashback, discounts and air miles for each dollar spent on the card. There are banks that offer premium show tickets and merchandize as well for customers to choose from. It is important to understand that the bigger the rewards on the card, the stricter the rules that govern them. Ensure you opt for the rewards that you are sure to use on a regular basis. For example, if you are person who does not travel much, it makes no sense to opt for the air miles credit cards. A credit card that offer cash back, merchandize or discounts on shopping may prove to be a better option.
The fees and the other costs
It is imperative to know that rewards credit card, appealing though they may seem, have a lot of costs associated to them. Primarily, the annual fee of the cost is going to be significantly higher than that of the regular credit cards. This can set you back by hundreds of dollars. The other aspects such as the interest rate, late fees and other penalties will also be on the higher side, thus proving to be extremely expensive in the long run. Hence, do not opt for these cards unless you are sure you can pay all these charges.
Terms and conditions
Read and understand the fine print on the application form before you fill in your details and sign on it. Find out about the grace period on the cards and the rules governing the redemption of the points earned. It is also critical to understand how you can earn the points on the cards. While some financial institutions offer $1 for every $100 spent on the card, a few others may offer lesser than that. Also, check the time frame within which you will have to redeem your points so you don't let them go in vain. Most banks also set a particular limit before you go about claiming your rewards. Find out about this limit well in advance.
There are rewards credit cards that do offer you complete value for money, but you can find the right ones only when you compare the ones that are available in the market and match them with your needs. A little effort and time spent on this can go a long way in helping you maintain your financial well being.