With all the credit card offers stuffing your mailbox, you may be wondering which one will give you the most value. Comparing interest rates and finance charges is a good place to start, but these days even instant approval credit cards and gasoline credit cards come with extras, like miles, points or even cash. After you have found cards with competitive rates and charges, shopping for the best perks and rewards is the next step.
Once you have an established credit rating, the credit card applications you receive will start promising you a little extra. One of the most straightforward benefits offered are the cash rewards. Here's how they work. The credit card company pays you a cash reward, usually a percentage of your new purchases. Depending on the card, you might receive your cash reward as a check or as a bonus credit on your card's monthly statement. Either way, you earn money for spending money. Choose a cash rewards card with the highest percentage payback possible. In most cases, applying the reward to your balance is the fastest and easiest way to use your cash reward.
Points are a close relative of cash reward cards. Instead of earning cash for purchases, you earn points. These points can be traded in for travel perks, cash, even merchandise. Given a choice between cash and points, cash is usually the better choice. Points typically have to be spent in certain ways or only at certain times, which may make this type of reward less valuable. The solution is simple. Choose the card with a point reward system that fits your lifestyle.
Airline miles credit cards are another type of credit card that offers rewards for responsible use. Each time you make a purchase, you earn miles toward an airline flight. Airline miles are usually redeemable from only certain airlines. You also may not be able to redeem your miles at certain times during the year. These times are called blackout dates, and usually coincide with the heaviest travel times: vacation and holiday seasons. The solution is to look for cards that offer no blackout dates or the least restrictive blackout date miles.
Choosing a great credit card is easy if you pay attention to the fine print. Once you understand how a credit card works, you decide whether the rewards will really be rewarding to your lifestyle.