Credit Card Rewards Are Very Beneficial
The “rewards” a cardholder receives from the credit card’s issuer are presented according to the number of purchases the cardholder makes with the card.The variety of rewards offered by credit card companies is virtually endless, with some of the popular rewards being air miles or discounts off of the cost of certain airline’s flights.Many stores and retailers also offer “loyalty” rewards if you are using a credit card issued in their name and some credit cards will give the opportunity to earn discounts on the purchase of a new car.
As desirable as these cards may seem to be, it is still necessary to question whether or not they are worth it.For the answer to this question, it is instructive to look at the rate of interest applied to purchases made on credit cards with rewards and compare them to those without rewards.Although there are any number of rewards credit cards offering some sort of reward or loyalty bonus, the lowest rate of interest on such a card is likely to be in the region of 15% APR.This is about 7-8% more in interest than you would pay for a very basic, low-interest credit card and infinitely greater, of course, than you would be paying on the zero-percent rate of interest on the introductory offer with many other credit cards.When you examine the whole assortment of credit cards that offer rewards you will find that the interest rates on some will be well over 30% APR.
In case you are a regular credit card user who earns sufficient rewards and you are paying interest at these kinds of rates, it may worthwhile for you to consider choosing a much lower interest credit card which does not offer rewards.If you pay off the whole balance on your credit card before payment is due, and so you really never have to pay interest, the rewards for using the card are actually free.You may want to consider the alternate choice of the cash-back credit card if you are not sure you can maintain the discipline of paying off the whole balance of your credit card each month.The cash back credit card gives back cash to you according what has been spent on the card each month and the reward credit card also works on this principally in the same manner.
The best cash-back rate is currently running at around 5% on spending that attracts almost 19% APR in interest, it is easy to see that you will still be paying quite dearly for the use of the card.You will be able to retrieve for your own pocket the 5% cash back on this card when you pay your total balance each month and avoid the interest charges.
It can certainly be worthwhile to you if you use the cash back credit cards and those that offer rewards if you keep paying your monthly outstanding balances consistently and avoid the interest that will be charged.Your personal financial picture may be given a brighter focus when you are using these cards that offer rewards and cash back.
