web analytics

Credit Card Rewards | Smart Way to Use Them

What is a credit card?

A credit card is a piece of plastic that permits you to borrow money from your bank in order to buy what you want.

The money has to be repaid within the grace period of a month or less.

As long as the funds are paid back within that period, there is no interest involved.

The delay means payment with the penalty.

What are the advantages and disadvantages of a credit card?

Advantages Disadvantages
The credit card statement enables you to keep track of your expenses You have the tendency to overspend because you do not need cash on hand to spend
Portable and easy to carry If repayment missed, the interests could be exorbitant
Credit history can always be useful in the future Credit card purchase can be quite addictive

What are the different types of credit cards?

There are many credit cards in the market.

  • Visa
  • MasterCard
  • American Express
  • Discover

There is no such thing as a ‘best’ card for everyone on the whole. It is not possible to pick one out the lot. The best card is very subjective to every individual. It depends on many factors such as the spending tendency, income, credit card limit, rate of interest, etc. The rewards offered by the credit card have an important role in decision making.

Each issuer will set the specific terms of the card, such as the rate of interest. A user can apply for two visa cards or two master cards or one of each. Master and Visa card are called payment networks. As a card holder, it might not make much of a difference. A variety of benefits is offered.

They are the ones that set the upper limit on the credit card. If the card is stolen or if the merchandise is damaged in any way, they are the ones to call.

How to choose them?

Before choosing the right credit the following factors have to be taken into consideration

  • Income

“Start with the end in mind”. Unless you know that you have the means to repay, you should not indulge. Your income should be an essential factor for considering what credit card to pick and what package deal.

  • Spending tendency

You know yourself the best. If you have the tendency to repay the loan within the grace period then you could allow yourself more credit. If you would carry a balance to the next month, the rate of interest and the approximate amount carried over should be calculated for decision making.

There are way too many cards out there with attractive schemes and packages. It is prudent to study possible expenditure and repayment tendencies before picking the appropriate credit card.

  • Credit card limit

This is the maximum amount of money that the issuer of the credit card will let you borrow. After deciding your spending tendencies, you can pick the upper limit as well. Maxing out your credit card limit is never a good idea.

Knowing the upper limit and playing it well below that number is always the practical approach. This number depends on your credit history [PDF]Understanding – myFICO.com. It could be anything between a few hundred dollars to tens and thousands of dollars. A situation when you are close to your credit card upper limit could reflect badly on your credit history.

Consequences could include lowering the upper limit by the credit card issuer and penalty eventually.

  • Rate of interest

The annual percentage rate is seen as the rate of interest. The number could be fixed or variable depending on the credit card issuer and the relevant financial indicators. It will be on par with the prime rate. Whilst a fixed rate of interest will tell you the exact amount to be repaid, a variable rate will fluctuate.

  • Balance computation method

Calculation of how the finance charge can be computed is necessary to calculate the budget. The billing cycles are factored in before picking the appropriate credit card. If two billing cycles are used, the financing fees become truly exorbitant.

Ideally, the normal daily average balance is utilized for this number. The average is then divided by the total number of days in your billing cycle. There are many credit cards that do not use two billing cycles.

  • Fees and penalty

Credit card issuers are not in this business for charity. They will look for every way to make money off of you. It is up to you to be careful and judicious. Sensible is the approach when it comes to calculation of numbers.

It is up to you to ensure prompt repayment to avoid such unnecessary transactions. Other charges will include the cost of cash advances, balance transfers, and such other accommodations. A Late payment does not mean the cancellation of the card. It means hefty bills to repay.

Credit cards with reasonable numbers are the way to go. There are plenty of card issuers who do not charge extra for other services such as balance transfers.

  • Rewards and incentives

These rewards and incentives are very attractive indeed. A program that is flexible in nature is a good choice to make. These rewards are used by the credit card issuers in order to lure the customers into buying it. These rewards and points have expiry dates. Take note of it and be sure to utilise all benefits offered by the card issuers

The various limitations and catches must be studied in detail before signing up for the credit card. If this card will be the card you use for any and all expenses, best bet would be one with a high credit limit and best rewards programme. A card for just emergencies would warrant a low-interest rate and low penalty. Do not pay extra for reward programmes.

The trick is to understand all the terms and conditions offered before signing up for a credit card.

What are best rewards credit card?

A great rewards credit card could involve cash back, points or miles. Whatever be the case, it means extra money back in the pocket. Various credit cards come up with various lucrative offers that make it easy for you to pick the right package. Most of them do not come with extra charges, annual fees, and introductory rates.

What are some rewards that come with the credit cards?

Air travel miles This includes the purchase of tickets against points. Some include food, lodging, car rental, etc.
Cash back with purchases Up to a certain percentage of the amount spent is credited back
Low-interest rate This includes low or no extra charges
Gift cards and vouchers This enables you to make purchases at designated stores and restaurants
Insurance Some cards offer this as part of the rewards package

1 credit cards on a laptopMany credit cards are versatile in nature and will let you pick what you would like.

 What does the credit card rewards compensation chart look like?

Most cards offer the following as reward points.

Travel – Redeem travel purchases, book a trip

Gift cards – Purchase a gift card

Cash – Account credit or checked by mail

Charitable donations – Make donations to your preferred organization from the given list

Privileges – lounge access, invitations to concerts and events

The idea is to find out how much the points are worth and where most of your expenditure goes to. The top credit card schemes with respect to rewards will pay two dollars for every hundred spent on them.

Cash back card Amex platinum Up to 1.25 percent
Supermarket card Tesco Five points every four dollars spent
Cards associated with bank accounts TSB Up to ten dollars per month back
Airline card BA Amex One point every dollar spent
Cash back cards Amex Gold Vouchers

What are the credit card travel rewards?

There are the following options when it comes to credit card travel rewards

  • Fixed value points – your points and value will correspond
  • Transferable points – you can transfer a chunk of points to gain something in return
  • Co-branded – access to privileges such as lounges, free checked bags, etc.

BA Amex is one of the best credit cards that offer travel awards. The great thing about AMEX is that the annual fees for the first year are waived on premier rewards gold.

A freedom card at CHASE can also get you similar benefits. Chase is associated with airlines such as British Airways as well as to Park Hyatt. Capital one can give you two points for every dollar spent. The points can be redeemed at one cent each. Essentially you can get close to two percent back on all of your expenditure.

It makes sense to collect Capital One points and redeem them for Coach Awards as opposed to transferring to an airline with a frequent flyer programme in order to get a low-level award.

With venture points, you must have sufficient points to redeem. There is no such thing as partial payback. They are good for hotels too.

What are the best gas credit card rewards?

1 pos card readerWhile choosing a credit card for purchasing gas, being brand conscious is not just the only way to go. There are also general credit cards that will provide rewards on other purchases. Regular purchases of gasoline from qualifying gas stations have higher benefits.

True earnings from AMEX involve no sign-up bonus. The annual fee is waived for the card if Costco membership exists. APR is zero percent on purchases for the first six months. Four percent cash back on gasoline purchases is available for the business owner.

Chase Freedom card awards purchases that include gasoline. The rate is five percent higher than most other cards with annual limitations.

Discover it credit cards earns a good cash back on gas in quarterly rotations. Stores and wholesale places do not qualify as gas merchants.

What to consider for best gas credit card rewards?

  • Pick a gas station close to home that you may use regularly
  • Pick a gas station where a discount is valid and the gas is not expensive

What are some master card rewards?

MasterCard offers various innovative solutions that provide the card holders with various options and the freedom to pick any. These reward points are available for redemption worldwide. They can be utilised both at the store and online. The option to reimburse either in parts, or fully, on purchases.

Master card rewards ensure increased satisfaction among customers and the potential to gain a recurring and loyal customer base. The card holders can utilize the points for whatever they would want, whenever they would like.

Some of MasterCard rewards include

  • Citi Prestige – air travel credit each year (250 dollars)
  • Bank of America – hundred dollars cash reward bonus on purchases worth at least 500 dollars
  • Barclay card – 100 dollars within first 90 days of account opening (on purchases worth 500 dollars)

These advantages vary from bank to bank and package to package. Amongst the popular master cards is the Barclaycard Arrival Plus World MasterCard. It includes rewards in travel as well as cash back and is very satisfying in nature.

Most cash back credit cards require that the credit owner has a very good credit history. This implies that the credit history is above 700 points, sometimes higher. It is important to work on the credit history and improve it before applying for a credit card.

American Express still runs a payment network and issues card. It now has begun to offer credit cards that allow all cardholders to carry a balance. This is in addition to charge cards.

What to look out for.

  • Introductory APR rates are low in order to lure in the customer. They tend to skyrocket in time
  • Issuers will look to boost rate at any possible excuse
  • The longer the grace period, the better

Conclusion

Owning a credit card is better than not owning one. That being said, every source of money should be used wisely. A credit card is ultimately debt that needs to be paid off, if you can pay off the money you spend a credit card is a huge convenience. A card with good value and flexibility is the key.

Leave Reply

As Seen On

Knowledge Base

Shares