Getting The Most From Your Credit Card Rewards
In the 60’s and 70’s, there was no such thing as credit card rewards. If you think that’s bad, consider the fact that most cards back then also charged an annual fee! Then in 1986, Discover became the first major credit card to have no annual fee, plus give cash back on spending. Ever since then, banks have been using miles, points, and cash back to make their cards stand out from the crowd. Today, nearly every credit card out there offers rewards of some sort.
What type of rewards will benefit you the most?
Whether you want frequent flyer miles, gift certificates to your favorite store, merchandise, or just cold hard cash… there’s a card for almost everything. It’s important to pick a rewards program that suits your lifestyle. However, what’s even more important is choosing one that gives you the highest percentage on your spending. For example, it’s not worth getting an airline card that only gives you miles worth 0.5% of your spending, when you could go with a cash back card that gives you 1.0% (that’s cash which could be used to buy a plane ticket directly).
Which are the best reward credit cards on the market?
There’s no “one-size-fits-all” answer, but for the most part, American Express and Discover are known to offer above-average rewards. For example, the American Express Blue Sky is a no annual fee card which gives 1.33% on spending – this is higher than most airline cards. When it comes to cash back, Discover More card gives up to 5%, however there’s a catch – the amount of spending which will earn the 5% rebate is capped. There are also a plethora of store credit cards which offer higher rebates when you buy from them, however these are usually a bad idea unless you spend thousands per year at their store.
Will it be worthwhile paying an annual fee for a rewards card?
Most reward cards do not charge annual fees. However, those associated with a given airline (i.e. the Delta Reserve credit card) or a certain hotel (i.e. Starwood Preferred Guest credit card) will usually charge an annual fee, ranging from around fifty dollars all the way up to a few hundred. As a general rule of thumb, it’s not a good idea to pay an annual fee, unless the rewards are outstanding and you spend a lot with the associated company.
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