The thought of credit cards can make some people cringe. After all, a lot of us have gotten in trouble with these plastic cards of death in the past (or maybe in the present). But credit cards can be a fabulous tool when used correctly. You can actually get credit card companies to pay you instead of the other way around. Who knew? (Um, everyone knew, Erin. Everyone.)
I’m not sure if a non-rewards card exists. If it does, don’t get it. Besides building credit (which you can do with a rewards card), a non-rewards card does absolutely nothing for you.
Let’s talk about the different credit card rewards. Specialty cards may offer other incentives, but these are the main four reward categories.
1) Cash back/gift cards. Cash back cards will give you 1-5% back on all purchases in either cash, gift cards, or balance credits. If paid in full every month, you are making straight cash for buying the things you were going to buy anyways. It’s like a couch cushion that just keeps spitting up change.
2) Travel. Who doesn’t like travel? Um, only crazy people. Travel reward cards give you points to use towards flights and/or hotels. While it may be harder to quantify, travel rewards often give you more bang for your buck than cash rewards. Travel rewards are my personal favorite and the reason I recently stayed in Toronto for 6 nights free of charge.
3) Points. Other credit cards give you points for each dollar spent. These points can then be exchanged for goods or gift cards. As a rule, I don’t like point rewards because I am not interested in accumulating more stuff. Those who prefer to save up rewards for electronics, gift cards, or entertainment items will enjoy a points card. Just make sure the one you are using is more advantageous than receiving cash rewards and making the purchase yourself.
4) Gas. For those that spend a lot of time in their vehicles, gas rewards may be the way to go. Some fuel cards are affiliated with a single gas station and can only be used at that gas station. Others may be used anywhere and rewards can be redeemed for gas gift cards to your preferred station. As fuel costs increase, any driver would be thrilled to get a few free fill-ups.
Choosing the Right Card
Now that you’ve decided which type of rewards card you prefer, it’s time to compare them. There are many sites online that can take your credit score information as well as the type of rewards you want to receive and tell you which credit card options would be best for you. These sites can compare over 1,000 credit cards for your unique situation — so you know it will come up with something good!
For those who use credit cards responsibly, the rewards can be great. Just make sure you pay off your balance IN FULL every single month. Then sit back and let the cash (or travel or gas or points) roll in.
Do you use credit cards? Which reward system do you prefer?