Do you pay your credit card balances in full each month? If you do, you should be using a rewards credit card.
Rewards cards aren’t as plentiful as they once were, but with a little research and your good credit scores, you’ll find one that matches the way you spend money.
If you buy gasoline every day or two, get a gas rewards card. If you entertain customers, get a restaurant rewards card. If you spend several nights a month in a hotel, get the card that rewards you for lodging purchases. Some cards will even combine uses, or give you 2% for one kind of expenditure and 1% for all the others.
If you have a child away at college and you’re paying the credit card bills, you might want to get a student card with rewards – so you can be rewarded for those visits to the college bookstore or the local pizza parlor.
Do choose a card with cash back rather than points toward gifts. In most cases, the gifts are vastly overpriced and you will have to spend many thousands before seeing any kind of return. In some cases, the points expire at the end of the year, so if you haven’t accumulated enough to spend by December 31, you start all over again.
2% back on $1,000 is only a $20 bill – but over a year’s time, that’s $240 for you to use as you please. And if you travel extensively, you may spend far more than $1,000 in a given month.
How to choose:
It’s easy now to see a wide variety of offers all in one place, so you can compare features like the annual fee, the reward offered, and the interest rate should you need to carry a balance.
First choose the offers that match your largest expenditures. You don’t need rewards for attending movies if you only go once a year. Then compare the percentage offered as a reward, and the annual fee. The best choice is no annual fee, but if the rewards are higher and your usage is great, it might be worth paying.
Next check the manner in which you receive the reward. Is it a credit on your account at a certain time each year? Can you request a check – and if so, how often?
When making application, be sure to ask for a credit limit that allows you to charge your monthly expenditures without exceeding 30% of your credit limit. Remember that the statement balance is reported to the credit bureaus – not the fact that you pay the balance in full each month. Expenditures that come close to your credit limit each month will lower your FICO scores, and right now it’s more important than ever to keep them high.
Why not order your free credit report right now? Check your scores so you know before you begin to negotiate for that new card – the higher they are, the better terms you’ll get.
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