Some Facts About Popular Credit Card Rewards

You will find that there are several credit cards available that offer all sorts of "rewards" which are based on how often the cards are used to make any type of purchase.Some of the most popular rewards are air miles and discounts off the cost of flights offered by certain airlines, however, the variety of rewards that are available is nearly endless.Some retailers and stores offer “loyalty” rewards if a card issued in their name is used for purchases, and you can even earn discounts with some cards toward the purchase of a new car.  

However desirable some of the rewards offered by some credit cards might be, the question that must be asked is whether or not these rewards are worth it.In an effort to answer this question it is helpful to compare the rate of interest charged on purchases made with cards that offer rewards with those that do not have rewards.Even if there are many credit cards which offer rewards or loyalty bonuses, the lowest rate of interest on these cards is most often around 15% APR.This interest rate is much more than the zero percent interest rate on the introductory offers of many other credit cards and about 7-8% more than the interest rate of a basic low-interest credit card.Across the whole range of reward cards, the interest rate comparison becomes even more alarming, with some interest rates exceeding well over 30% APR.

If you are a regular credit card user who wants to earn sufficient points for worthwhile rewards and have to pay interest at these sort of rates, then it would certainly be worth giving serious consideration toward choosing a much lower-interest credit card which does not offer rewards.The kind of credit card user who pays off their total card balance before the payment due date and never has to pay interest, will actually receive the rewards for using their card for free.You may want to consider the alternate choice of the cash-back credit card if you are not sure you can maintain the discipline of paying off the whole balance of your credit card each month.The cash back credit card pays back in cash, a certain percentage of what has been spent on the credit card each month, and this makes it function quite in the same nature as the reward credit card.      

The best cash-back rate is currently running at around 5% on spending that attracts almost 19% APR in interest, it is easy to see that you will still be paying quite dearly for the use of the card.If you have developed the habit of paying all of your outstanding balances each month to avoid paying interest, you can of course, put the 5% cash back into your own pocket.    

If you intend to maintain a strict personal practice of repaying your balances every month to avoid paying interest, it may be wise to use the credit cards that have cash back and rewards attached to some of them such as gas credit cards.When used in this way, these credit cards can be very beneficial to your personal finances.