When comparing different types of credit cards, you explored some of the benefits of rewards cards and you’re leaning towards applying for one. But how can you tell if a rewards credit card is really right for you?

To figure out whether or not you should apply for a rewards credit card, start by asking yourself the following questions:

Is there a rewards card tied to a company you make regular purchases from?

Some rewards cards like the David Jones American Express credit card offer rewards tied to a specific retailer. In this case you can earn David Jones gift cards. If you shop there frequently, it might be worth getting a rewards card that offers benefits you can really use.

Do you charge enough to your credit cards that you’ll actually earn rewards?

You might have to accumulate tens of thousands of rewards points to redeem them for the rewards you’d like. If you don’t use your credit cards often, it could take you years to earn the points you need. If you’re a big credit card spender, a rewards card might be a great option. If not, you might be better off looking for a no-frills card that lets you save money up front.

Are you willing to start using your credit cards more often?

Even if you’re not a big credit card user now, you could change that by charging most of your routine purchases and then just paying off the balance before you’re charged any interest. Not everyone is comfortable with that idea, but if you are, you might be able to take advantage of your usual spending, putting it towards earning rewards points.

Are you willing to focus on just one credit card, or do you tend to use several?

Rewards cards are most valuable when they’re the only card you use, or at least your primary credit card. It’s all about maximising your spending on that card so you can earn as many rewards points as possible. You can’t really do that effectively if you’re splitting purchases up amongst several credit cards.

Do the rewards justify the annual fee in your mind?

Rewards credit cards often have high annual fees (getting higher as you move up the line from classic to gold to platinum). Take a look at some example annual fees for rewards cards and compare them to the potential for earning rewards points. Is it worth it to you? If the reward you’d like to earn costs less up front than the amount you’d pay in an annual fee, it’s not a smart choice (especially if you’ll have to accumulate points over more than one year). If the fee is significantly smaller than the reward value, like a free plane ticket with frequent flyer points, a rewards credit card might indeed be a good idea.

Only you can decide if a rewards credit card is right for you. We hope these questions will help you evaluate your personal situation to make a more informed choice.