Credit card companies want you to use your credit card. To get you to do that, they will offer rewards based on your charging habits.

Usually the more you charge on your card, the bigger the reward you get. The key is to understand what’s out there so you can pick the best rewards credit cards based on your spending habits.

Remember, if you’ve had trouble in the past with credit card debt, you’ve got to be extra careful with rewards credit cards so that you don’t fall into bad spending habits, thinking you’re “earning rewards.”

Kinds of Rewards

There are several kinds of rewards out there including cash back, airline miles, points earned and even gasoline. These cards are called rewards credit cards and are very popular right now.

Cash back credit cards are the most straight forward. Very simply put, you get a percentage back for amounts charged to your card. Most cards offer up to 1% cash back on purchases made.

Points rewards credit cards are a little different. For charges made on your card, you earn points towards premiums or gifts from a catalog.

Gas rewards credit cards are actually pretty generous giving the user up to 5% on gasoline purchases made. The reward can be used either at the pump, in the store on other items or even cash back to your card is an option.

Mileage rewards or airline rewards allow the user to earn free flights and trips for using their card.

Reward credit cards are attractive and have a special allure. The trick is to select the card that offers a reward that you can actually take advantage of. Another thing to watch is exactly how much needs to be spent to earn the reward.

Some of the airline mile reward cards require you to spend up to $25000 in a year to earn a single domestic flight. If you don’t spend at that level, you could never use that reward.

Use the Credit Card Finder to find the best rewards credit card.

All that Glitters isn’t Gold

With that in mind, if you are holding a points reward card, the premiums available are usually extremely overpriced. In some cases, you would need to spend $5000 to earn 5000 points. With those 5000 points, you could get a toaster oven. Yipee! That reward is not worth the interest you’ll pay on the 5000 you spent to get there.

Sometimes there are limits on how many rewards you can acquire over a given period of time. Like some of the gas rewards credit cards that offer a 5% reward, but the rewards stop after you have charged $300. The Discover 5% Gas Card doesn’t have this restriction.

Cash is Still King

Still, the cash back credit cards are the universal one to consider. Just make sure you know how you earn the reward promised and how long you have to redeem that reward after you receive it.

A few rewards cards will not award the reward unless the balance is paid off at the end of the billing period. So if you carry a balance over, your rewards may be lost.

Keep in mind that most of these rewards credit cards have a higher APR attached to them. So it will cost more to carry a balance from month to month. In other words, read and understand what all the terms and conditions mean. That way you won’t get any surprises at the end of the month.

Related Resources:

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