Things to look out for when shopping for a credit card with rewards.
Credit card rewards programs can be a great way to get some extra cash in your pocket or get gifts and discounts for those who pay their credit card balances in full every month. However many rewards credit cards come with catches that may make them less rewarding for most users. Here is a list of things to beware of when signing up for a rewards credit card.
Fees and APRs.
You shouldn't have to pay an annual fee to use your rewards credit card. Avoid rewards cards that charge annual fees, you may rack up rewards points or cash back but you may earn less than the cost of membership.
APRs on rewards credit cards are traditionally higher than non-rewards cards. After all someone has to pay for the cash back, points, and discounts. Those who carry a balance should avoid rewards cards due to higher rates.
Look for rewards cards that offer rewards that never expire or rewards that take at least 2 or more years from the date of earning them to expire. Otherwise you may find yourself just a few points away from a $100 cash back check only to find that a few hundred points expired last month.
The same holds true for rewards cards that offer airline miles, discounts, and points for special rewards stores. If it takes you 2 years to rack up enough points for that plane ticket to London but points expire 1 year after they are issued, you may never be able to redeem them for that ticket.
Unless you are a high spender who also pays their balance off in full, tiered rewards programs aren't worth it. An example of a tiered program would be a program that gives you say 0.25% back on all purchases up to 3,000 dollars in a calendar year. Once you reach 3,000 dollars in spending it might jump to a full percentage point per dollar spent or you may have to reach even higher spending levels to get that.
A program that offers "up to 5 percent" back on purchases may do so, if you spend tens of thousands of dollars each year, otherwise purchases may earn fractions of a percentage back.
Look for cards that offer a full 1 percent back on all purchases, many cards do and in addition may offer "bonus" purchases that earn more.
Special Cardmember Sites.
Many credit cards offer users access to special shopping websites where you can shop your favorite stores online through special links. These special links may offer perks such as free shipping, discounts, or bonus points on those purchases.
You should read the fine print before proceeding and if you don't follow the instructions and link exactly, you may end up not earning those bonus points or discounts. You must shop directly through the link provided to be eligible for the bonus.
Limited Time Offers.
Signing up for a credit card that offers a higher percentage back on purchases may sound like a great deal, until you read the fine print. Many of the cash back or point percentages per dollar listed on promo offers are just that, promotional offers. The bonus points might be available only for a certain length of time, so check to see how long and also see what kind of rewards are offered after the initial promotional period.
Rewards are great, when you can actually redeem them. Look for cards that offer online account management and easy access to rewards tracking and spending. A card that allows you to go online and simply check out the rewards that you want means you'll be more likely to do and and get the rewards. Complicated mailing and phone systems may leave you frustrated, charge you for redemption, or never get used.
Keeping all of these things in mind when shopping around for a rewards credit card can ensure that you get the most out of your credit card without falling victim to fees, complicated rewards programs, or programs filled with restrictions.