Choose the Right Reward Credit Card and Save Money

With the wide range of credit cards in the market, you need to watch out for the card you choose. If you make the wrong choice, this could cost you a lot of money. With the average credit card debt standing at a distressing $7,122 as of march 2013, it is certain that people need to use their cards wisely. The average household credit card debt was recorded at $15,266 in the same period and this shows that the American debt profile could only be getting worse. Diving deep into the statistics, records show that American consumers owe $11.31 trillion in debt and of this $850.9 billion is a credit card debt.

Choosing the right reward credit card can help cardholders minimize the bottlenecks that come with use of these cards. If you need a general card and not a specific card like airline reward credit card, it is good that you forfeit the higher reward rates offered as this will provide ubiquity and flexibility. In the same way, if your card carries a balance, you need not go for a card which attracts high rewards because most often the APR will be high.

In most cases, low interest cards will save you more money. There are a number of considerations you should make when choosing a card and they include the reward redemption and time horizon. It is essential that you know exactly what you get from every dollar you spend through a reward card program. Although you will have the exchange rate for redeeming your points calculated for you, it is important to know how much you will spend and how long you will fly.

For example, if you have the Discover Miles card, you can only redeem 0.5 points for every 1 cent in cash. Many airline credit cards will offer you sign up bonus that may be able to amount to $800 but then again they will charge you an annual fee. It is important that you do your calculations properly.

You need to determine if you will get value out of the card. The more you hold the card, the more you will pay in annual fee and this means that your annual fees may outweigh the sign up bonus. You need to examine the time horizon in which you intend to hold and use the card for optimal perks. Otherwise, some of the perks you are offered may be taken up the annual fees.

For example, if you get a reward card with a $150 sign up bonus and the same card attracts an annual fee of $75, it means that in two years, the annual fee with surpass the bonus. If you intend to hold the card for three or four years, then it is better to consider another card.

There are limitations on certain cards, which you need to watch out for. Examining reward caps can help you in optimizing the perks. Some cards may limit the rewards to certain period for example, quarterly for the Chase Freedom card and year for the CitiForward. Another thing you need to check on is the bonus category. Many of the cards will not offer flat reward rates and this means that they will offer something extra. You may get extra rewards points for groceries and gas purchases.

Some of the cards may have rotating reward categories within certain period. They may be offering a bonus of a particular category like grocery for three months, and for other three months they offer rewards on gas category. You should check how such bonus can benefit you and if they will affect your spending pattern or not. Always ensure that you are not enticed to spend more in order to gain more redeemable points. You need to follow your normal spending pattern.