This is a question I’ve been asked many times. We all spend thousands of dollars every year on our credit cards, so why not be rewarded for our purchases.
Reward credit cards have become very popular over recent years, offering anything from flights, to points which can be exchanged for all types of goods and services.
So when is a rewards credit card a bad choice?
Basically, most rewards credit cards tend to have a higher interest rate. If you are the type of person who pays off their balance in full each month, then this will not worry you. However, if you are the type of person who uses your credit card and racks up a balance, only to pay the minimum payment, then a rewards credit card may not be the smartest choice.
Whilst you will certainly be getting reward points for spending on your credit card, you will most likely be paying for the rewards in high interest payments.
To be sure you are benefiting from your rewards credit card, follow these simple steps.
Step 1: Check how much your interest charges have been over the last 12 month period.
Step 2: Check how many reward points you have earned over the last 12 months.
Step 3: Convert your reward points into a dollar value so you can compare with your interest charges.
Step 4: If your interest charges exceed the value of reward points (in dollar value), then you clearly would be better off switching your rewards credit card to a low rate credit card.
For your convenience, we have listed below the top offers for both rewards credit cards and low rate credit cards.