Frequently Asked Questions about Everyday Rewards Credit Cards
Why would I need a Rewards Credit Card?
A rewards credit card can be used to earn points that can be redeemed for any number of things. By using your credit card to make purchases, you can earn points that can be redeemed for travel, merchandise, gift vouchers, cash back and more. By choosing the best rewards credit card to suit your lifestyle, you can really benefit from the rewards.
How do I know a Rewards Credit Card is right for me?
Rewards credit cards are a good choice if you are a big spender. To make the most of a rewards credit card, it is best if you use your credit card regularly to make purchases. If you use your credit card to pay bills and pay for all other household expenses, you could probably earn a good number of points. If you travel a lot and pay for flights, car hire and hotels, then you should be able to find a rewards credit card that can give you a lot back.
A rewards credit card is a particularly good choice if used regularly and the balance is paid off in full each month. This way, you should have the ability to earn enough points, while not paying interest. Some rewards credit cards may charge higher interest rates, so it's important to pay off the balance each month so that what you earn in points is not lost on the amount you pay in interest.
The same applies for annual fees. Some rewards credit cards can come with slightly higher fees, so that the credit card provider can provide you with a good rewards program. This is why it can be a good idea to only choose a rewards credit card if you will use it regularly. Otherwise you may pay more in fees than you get back in rewards.
When would a Rewards Credit Card not be right for me?
Different credit cards suit different people. While a rewards credit card is perfect for some users, it might not be beneficial to others. It's important to look at how you plan to use the credit card, and whether your credit card spending style will suit this type of card.
If you don't use your credit card on a regular basis, then you may not see the full benefits of a rewards credit card. Due to the fact that rewards credit cards can have slightly higher annual fees than other credit cards, if you do not spend enough, then the points you earn could be less than what you are paying in annual fees.
Also, if you do not pay off your credit card balance in full each month, then a rewards credit card might not be the best choice. Although interest rates will vary, rewards credit cards tend to charge slightly higher interest rates. So if you do not pay off the balance in full, then the amount you pay in interest on the carried-over debt may outweigh any rewards benefits.
However, if you plan to change your credit card spending style, then you might be able to find a rewards credit card to suit you. Compare rewards programs in detail to ensure you can earn rewards that you actually want and need, and make sure to check that the amount you receive in rewards is not negated by higher annual fees and interest rates.
What kind of rewards can I earn on a Rewards Credit Card?
There are a huge variety of rewards credit cards on the market, so it depends on finding the right one for you. There is no point getting a rewards credit card that gives you air miles if you never fly anywhere, just as there would be no point getting a rewards credit card that gives you retail items from a store you don't like.
Travel
If you travel a lot, then there are some great options on rewards credit cards that you can put towards travel. Whether you travel for business or pleasure, by paying for flights on your rewards credit card, you can earn points for more flights in the future.
When choosing a rewards credit card for travel, make sure to read the fine print to see if there are any restrictions on travel. Also make sure that points can be redeemed on airlines that you actually want to travel with. The same applies for things like paying for accommodation and car hire. By using your rewards credit card to pay for these, you can earn points for future trips.
Merchandise
Many rewards credit cards offer great deals on retail items like jewelry, clothes, electronics and perfume. Choose a rewards credit card that gives you the opportunity to earn points to get things you want or need, as there is no point earning points that you don't want to redeem. Many programs will allow you to choose what you want online, making it easy to see how many points are needed for each item.
Gift Vouchers and Cash Back
If you prefer the freedom of choosing to spend what you want and where, redeeming points for gift vouchers and cash back is an excellent option. This means you can spend the money you earn as you like and when you like. You could even give the gift vouchers away as presents. Choose a rewards credit card that gives the maximum amount back for the points you earn. You can also check whether your rewards credit card allows you to have the cash you earn in points paid directly into your account each month.
What kind of Rewards Credit Cards are there?
Some rewards credit cards will offer a variety of rewards, while some will focus on just one type of reward. As always, be sure to compare all options so you can choose the most suitable rewards credit card for your needs.
- Petrol Rewards Credit Card: Earn points that can be redeemed at the pumps.
- Air Travel Rewards Credit Card: Earn points to get flights.
- Hotel Rewards Credit Card: Earn points to use in different types of accommodation.
- Car Hire Rewards Credit Card: Earn points to use next time you rent a car.
- Retail Rewards Credit Card: Earn points that can be redeemed for products and services in-store and online.
- Store Rewards Credit Card: Earn points that can be redeemed in different shops and department stores.
- Bonus Rewards Credit Card: These will normally give you bonus points as an introductory offer when you sign up. Read the fine print to make sure that what's on offer does benefit you.
What should I compare when choosing a Rewards Credit Card?
As with choosing any type of credit card, there are certain features to be compared to make sure you are getting the best card for your needs.
Points Capping
Some credit card providers put caps on how many points can be earned when using a rewards credit card. So, you may be limited to only earning a certain amount of points within a certain period of time. If you are a high spender, this can be a big downside to using certain rewards credit cards. It might be better to find a rewards credit card that doesn't do points capping.
Points Expiry
Similarly, some credit card providers will put a time limit on how long you can keep your rewards points. This can be frustrating if you are not a regular credit card user and it takes a while to build up your points. Even if you use your rewards credit card a lot, you may not want to spend your points straight away. There are quite a few rewards credit cards that offer no expiry on rewards points, so it could be better to choose one of these.
Point to Dollar Ratio
This can be a tricky feature to compare. Different rewards credit cards will offer different ratios, meaning that you may earn one point for each dollar spent, or you may earn three points for each dollar spent. Sometimes the amount you earn will also differ depending on where you make the purchase and what the purchase is.
Each point will equate to different amounts, so that 1000 points could mean you are able to redeem the equivalent of $1 or $10. You should be able to find all the details in the fine print, so make sure you make a thorough comparison so you know you are actually getting a good deal.
Annual Fees
As mentioned, annual fees on rewards credit cards can be slightly higher than on regular credit cards. Credit card providers need to make sure they are not losing money by offering users rewards programs, so annual fees are usually raised to make up for any possible losses. Basically, you get what you pay for. There are some great deals on low annual fee rewards credit cards, so do some research to find the best one. The most important thing to remember is, don't choose a rewards credit card that will cost you more in annual fees than you get back in rewards.
Interest Rates
How you use your rewards credit card will determine how much interest rates matter to you. If you always pay off the balance of your credit card in full each month, then interest rates should not really matter. If you carry a balance, then interest rates will be very important. Rewards credit cards can have slightly higher interest rates, so be sure to take this into account when choosing a card.
Points Redemption
Before applying for a rewards credit card, check how easy it will be to redeem your points. Some rewards credit card providers make it overly difficult to redeem points in the hope that users will just not bother. Information on how to redeem points should be clearly stated, but make sure to read the fine print to make sure it won't be hassle later on down the line.
Bonus Points
Introductory offers on credit cards can offer excellent benefits. Some rewards credit cards will offer bonus points when you sign up, to be earned on your first purchase. As with any introductory offer, just make sure the offer actually benefits you, and read the small print to make sure there aren't any hidden catches.
Flexibility
With a rewards credit card, as with any credit card, it's important to have flexibility. Think about what you will be using your card for, and check whether the rewards credit card you want will allow for flexibility in its usage.
What are some things to look out for when choosing a Rewards Credit Card?
There are pitfalls to using any kind of credit card. When using a rewards credit card, there are certain rules to be followed to make sure you get the most out of the card.
Don't spend just to earn points: It's easy to get carried away with spending because you think you will get something in return. However, make sure you don't spend extra just to earn points. This will usually mean you lose any benefits of the rewards points, because you have bought things you don't need.
Choose a card that gives the rewards you want: Many people choose a rewards credit card just for the sake of earning rewards. It's important to think about the type of rewards you really want and need, and to choose a rewards credit card that will give you them.
Think about interest rates and annual fees: Consider how much you will earn in rewards and compare it to how much you will pay in fees and interest. Choose a rewards credit card that gives you more than you put in.
Check for points capping and expiry: It might be best to choose a rewards credit card that does not have points capping or expiry. It can be very frustrating to know that you could be earning points but your points have been capped, or to lose any hard-earned points just because they have expired.
Will I earn rewards on balance transfers and cash advances?
You will not earn rewards points on balance transfers and cash advances with a rewards credit card. Its best not to use any credit card to take out money, as the cash advance interest rate is usually quite high. Also, unless it is specifically stated that a rewards credit card is also a balance transfer credit card, then it may not be the best idea to transfer balances onto the card. As mentioned previously, rewards credit cards can have slightly higher interest rates, meaning that any balance left unpaid on the credit card will attract a larger amount of interest.
Is a Rewards credit card suitable for you?
YES
I plan to use the Rewards on offer.
YES
I plan to use the card frequently.
YES
I plan to pay the balance off regularly.
