My friend once asked me: "What is the best credit card you have ever come across?" I was really at a loss, because this is not a simple question. "What is best for you?" I asked. "Do you travel a lot, do you enjoy spending sprees or are you a car maniac? What is your life style, what are your habits?"
You need to answer all these questions before applying for a credit card, especially if you are looking for a reward card. You need to be honest and realistic. Otherwise there is a chance that you will end up with a huge credit debt and ruined credit history.
The first thing you need to remember is that a reward credit card is only for good or excellent credit score. There are no bad reward credit card deals.
So, if you qualify for such card read ten simple rules that you can follow in order to choose the best reward credit card:
1. Apply only for those rewards that are useful to you.
2. Pay off the balance in full on a monthly basis. Otherwise carefully consider the interest rates.
3. Be realistic - if you spend a little, do not expect much.
4. If you do not pay in time or do not follow terms and conditions you can lose your rewards.
5. Do not make far reaching plans, for rules can change rapidly.
6. Calculate the value of a reward and the cost of purchasing it.
7. Use only one credit card and increase earning by additional users.
8. Read carefully fine print in order to know the cap of rewards.
9. Find out the expiration dates of points or miles.
10. Select a card brand (VISA, MasterCard, American Express, or Discover) that gives you maximum rewards and flexibility.
At first thought reward credit cards may seem very attractive. However they have some disadvantages that can make such a card more a hindrance than a benefit.
The first one is interest rate. Interest rates of reward cards are usually higher. You will also find out that annual fees can set you even further.
The second point to consider is late payment fees. With a regular card you will usually be charged maximum $30 late payment fee. With a reward credit card it is different. A card issuer can cancel all the points you have earned during the last month for late payment.
You should also take into account that a credit card issuer reserves the right to make alterations into reward policies any time. One day you will receive a statement in the mail that absolutely changes your cardholder agreement.
But if your income is high and your spending is high a reward credit card can be really beneficial. If your income is not high, but you still want to make maximum use of your reward credit card you can get a quick sign up reward and close the account. An example of such card is Business Gold Rewards Card from American Express. You can cash in $125 which is a free amount of money given as a reward and then cancel the card.
In any case you need to remember that when choosing a credit card the most important thing is not rewards but better interest rate and fees.
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