Applying for Credit Cards - Credit Card Rewards and Incentives

Years ago, credit card reward programs were simple: There weren’t any. Then Discover came along with its cash-back offer, and airlines hooked up with banks to issue credit cards that earned frequent flier miles.

Reward cards offer the same purchasing ability as regular credit cards but also allow you to enjoy rewards from points earned or immediate discounts on purchases at select retailers.

Today, consumers face a bewildering array of ways to earn, and spend, credit card rewards:

A credit card can contribute to a retirement account, score theme-park tickets or knock several hundreds off the price of your next car.
You can convert miles into hotel stays or restaurant meals—or use them where you stay and eat to earn extra miles.
Once you reach the stratosphere of spenders, you can use your rewards to design one-of-a-kind vacations and “experiences,” like a week at a French cooking school.

All this choice leads to inevitable second-guessing. Sure, you’re getting rewards. But are you getting the most rewards possible? Do you have the best card, and are you taking the best advantage of it that you can?

The best reward card depends on a number of factors from how much you charge to how much flexibility you want to how fast you can use your accumulated rewards.

The secret to finding the best reward card for you is to get a card that offers rewards from a vendor you normally shop at anyway. For example, if you buy a lot of gas, get a card from a vendor that gives you points for filling up your car with petrol.

If you’re the kind of credit card user who carries a balance, reward cards are not for you. Any benefit you get from a rebate card is swamped by the added interest costs when you carry a balance. Instead, you should look for the lowest-rate card you can find so you can pay off your debt as quickly as possible. Don’t get sucked in by 0% offers on rebate cards; after they expire, you’ll typically pay a much higher interest rate than you could find if you looked for a low-rate, non-rebate card.