Credit Card Rewards Help You Save Money

There are several credit cards available that offer many types of "rewards"  based on how often the cards are used to make any type of purchase. The variety of rewards offered by credit card companies is virtually endless, but some of the more popular rewards are gas credit cards, air miles or discounts off of the cost of certain airline’s flights.Some retailers and stores offer “loyalty” rewards when a card which was issued in their name is used for purchases, and you can even earn discounts with some credit cards to put toward the purchase of a new car. 

You should be asking yourself if these rewards are worth spending money in order to obtain them, in spite of  how desirable they may seem to be.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.Although there are any number of cards offering some sort of reward or loyalty bonus, the lowest rate of interest on such a card is likely going to be in the area of 15% APR.

This interest rate is much more than the zero percent interest rate included on the introductory offers of many other credit cards and about 7-8% more than the interest rate of most basic low-interest credit cards.When you do a comparison of all of the interest rates on the whole range of credit cards, it will show that some of them exceed over 30% APR.

If your credit card is one of those that has these higher rates of interest and you are using it to earn enough points to get the types of rewards you want, it may be a better idea to switch to a lower interest credit card and save money instead of reward points.The rewards for using a credit card will be free to someone who pays off their total credit card balance each time before the payment due date, because they will never have to pay interest.

Unless you are sure that you can pay off all of the total balance on your credit card every month, you may need to use an alternative such as the cash back credit cards.Similar in principle concept to the reward credit card, a cash-back card pays back cash equivalent to a preset percentage of whatever has been spent on the card each month.     

The best cash back rate is currently around 5% on what is spent, and with a 19% APR in interest it becomes very obvious that you are paying a lot to be able to use 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.   

Credit cards with rewards and their family members, cash-back credit cards can therefore, be worth it, when you are maintaining a personal policy of repaying the balance on your card, before it starts to attract interest.It could be of benefit to your finances, to use the credit cards which offer you some cash back or rewards and you consistently repay the balances on them each time to avoid the interest charge.