Depending on what you spend your money on, an appropriate rewards credit card can help you earn extra on your purchases. There are three kinds of rewards programs for different kinds of consumers, and knowing the difference between cash back, points or miles will help you choose the appropriate credit card for your lifestyle. But beyond knowing the basics, you should consider a few factors before applying for a new rewards credit card. After all, each new card application adds a hard inquiry to your credit report, whether you are approved for it or not.
In this article, we have compiled four points that you need to consider before you
apply for a new rewards credit card so that you know exactly how you’ll maximize its value…
What do you spend your money on?
Your first step should be to determine where you spend the most. If you are usually on the road for work, consider a gas rewards credit card. If you plan on eating out with friends or your partner, opt for a card that rewards you for your restaurant spending. During the current pandemic when you may not be going out at all, a card that rewards you for food delivery can really be helpful. There are also numerous reward cards that let you earn in multiple categories.
What are your rewards options?
With most cash back cards, you earn a certain percentage of cash on your spending. The Capital One QuicksilverOne Cash Rewards Credit Card offers an unlimited 1.5% cashback on all your purchases. A number of other cards let you earn points that can be converted into a dollar value. And if your rewards card does not earn you cashback, it most likely rewards you in points or miles. The American Express Gold Card is one example, which offers Membership Rewards points on your purchases. Meanwhile, an airline credit card like the United Explorer Card offers miles for your spending on United products and restaurants and hotels.
What is the value of your rewards?
Because your rewards are worth a specific amount of money, you will want to pay close attention to the card’s redemption rate. The typical value of rewards is around 1 cent per point/mile. Make sure you are receiving a 1:1 value when you cash in, otherwise you will be leaving cash on the table. To calculate the value, take the cost of what you want to buy and divide it by how many points are needed.
Some rates will be even higher when points are redeemed a certain way. And likewise, you could potentially devalue the number of your points and miles, too. This is common with gift cards and when you pay with points at online checkouts. Make sure that you check the dollar value of your points before you cash them in. Finally, stay on the lookout for when your rewards hit your account and expire. One big mistake that rewards cardholders often make is waiting either too long or not long enough to redeem and missing out on their earnings.
What fees come with these rewards credit cards?
Because rewards cards have a lot of value, they generally come with annual fees and high-interest rates. Some cards can also charge a fee when you redeem your rewards. Make sure you read the fine print on the card’s website before applying. There is usually a “pricing and terms” column as well as an “offer details” column that is worth checking out. In order to deal with the high-interest rates, pay your balance on time and in full every month to avoid being charged interest. If that’s not possible, consider a 0% APR credit card with rewards if you think you’ll have trouble making a full payment the first month or so but still want to earn on your spending.
Rewards credit cards present an extraordinary opportunity to earn more on your purchases while also building credit. Before you apply, make sure that you look around for the best card for your spending habits and check your credit score. Most of the best cards require good or excellent credit to qualify. Remember, while charging everything to your card may earn you more rewards, make sure that you only spend what you can pay back in full when your monthly bill comes.
Featured Rewards Credit Card of October’20
Get 15% cashback for 3 months on all grocery & fuel spend. T&C Apply
Citi Rewards Credit Card Product description
With the Citi Rewards Credit Card, you can convert your spend into cash rebate, shopping vouchers and much more. Get ‘But 1 Get 1 free’ movie tickets at Vox cinemas and instant cash loan at a click of a button with the Quick cash facility.
- You require a minimum salary of AED 8,000 per month to be eligible for this card
- No annual fee in year 1. From year 2, the annual fee is waived unless the annual spend is below AED 9,000, in which case a fee of AED 300 will apply
- Monthly interest rate is 3.25% of the outstanding account balance with up to a 52 day interest-free period.
- The foreign currency rate applicable on overseas transactions is 2.99% per month
- Balance transfer at 0% rate of interest for 6 monthly instalments. One time processing fee of only 3% of the BT amount. No pre-closure fee. 6months to 48 months Balance Transfer plans also available.
Rewards Credit Card Main Benefits
- Earn up to 1.5 Thank You points per USD & convert your spend into cash rebate or shopping vouchers
- Pay with points for your purchases via SMS or online
- Unlimited access to 1000+ airport lounges worldwide for each cardholder
- ‘buy-one, get-one’ complimentary movie tickets with VOX cinemas
- Quick Cash: instant cash at a click of a button
- PayLite: turn any big purchases into small payments
- Citi World Privileges: Enjoy travel, dining and entertainment discounts locally and across 95 countries
Apply Now for Citi Rewards Credit Card – Instant Application