Credit Cards With Rewards

The first cash reward credit card was the Discover card which was released in 1986. Since its issuance, the market has expanded to include a vast range of cash back rewards, cards tied to airlines, cards tied to hotels, and cards which offer flexible point earning that can be exchanged for any or all of the above.

There are two key rules to using a travel reward or cash reward credit card. The first is to use it as much as possible. Since rewards are earned proportionately to the amount spent on the card, it is in the cardholder’s interest to use it as much as possible. One way to quickly boost usage is to move monthly bills to the card. Such services as telephone, cable, cellular phone and internet can all be easily billed to a credit card. Many utility providers and even insurance carriers will also allow for payment by credit card.

Going hand in hand with the first rule is the more challenging second rule. One must pay off one’s credit card balance every month. Even a five percent credit card cash reward is not a very big benefit if one has to pay 8 years of interest at sixteen percent to receive it. For those who lack the discipline to do this, American Express’ rewards cards may be a good option because most require full payment every month.

Once one has mastered these two basic rules, the challenge then becomes finding an appropriate credit card reward program. Since one will not be paying interest, the card’s APR is unimportant. The annual fee for most cards typically ranges between nothing and a hundred dollars, so it is important to spend enough on the card to get back the cost of the fee in rewards. For those cards with higher fees, one should be sure that they will be able to get benefit from the additional services offered.

Cashback rewards cards typically offer the greatest benefit to those who do not travel or who are not looking to travel. For those who are very closely tied to one particular airline, that airline’s card will usually make the most sense. Even though it may have less flexibility for use on other airlines, the ability to earn bonus miles for purchasing tickets on that airline will be a significant benefit. Finally, for those who are looking for travel benefits, but are not exclusively tied to an airline, flexible earnings programs like US Bank’s FlexPerks or American Express’ Membership Rewards will give the greatest benefit. The reason that a travel reward card can be better than a cash reward card is that miles, used correctly, can be worth anywhere from 2 to 5 cents, making them more valuable than a one to two percent cash back award.

Credit cards with rewards can offer significant benefits to those who use them wisely. Careful study combined with a strategic shift in spending patterns can yield rewards that are beyond most people’s expectations.