Are you considering a rewards credit card? Do you have questions about how they work or how to choose the right card for you? If so, then you’ve come to the right place.
Rewards credit cards offer you rewards as an incentive to use your card more often. For instance, credit card providers may offer you cashback, rewards points, Airpoints etc. Basically, when you use the card, you receive some type of benefit with a rewards credit card.
There different types of rewards you can receive, but the most common are:
- Cash rewards: some cards may offer cashback by sending you a cheque or making a deposit into your account, but most cards give you “cash rewards” instead that can be redeemed and used as credit on your card.
- Reward points: these cards offer points for each dollar spent using their card. Points can be redeemed for flights, purchases, vouchers, cash, etc depending on the card details.
- Airpoints and Airmiles rewards: this type of reward credit cards rewards you with airpoints that can be redeemed for airline tickets. Each program will have its own rules as to how many miles you earn, which can then be used with a frequent flier program. Some programs even let you convert the miles between frequent flier programs; however, be aware that you may lose some miles during the conversion.
Watch Out for these issues
Rewards credit cards can offer many benefits when used correctly but here are some tips to keep in mind before you apply for a card:
1. Credit score: rewards credit cards, at least those worth having, usually require you to have a high credit score. If your credit score is not what it should be, the credit company will more than likely reject your application.
2. Higher fees: these types of credit cards often come with higher fees, such as an annual fee, membership fee, etc. Interest rates can also run higher than they do on other credit cards. If you have a rewards card with a high-interest rate, then it will be imperative to pay the balance off in full each month.
3. Minimum spend: there are some rewards cards that require you to meet the minimum spend in order to earn rewards. For instance, the card may require you to spend $4,000 in a calendar year, before you can earn rewards. It’s a good idea to take a look at your budget and see if you can afford to meet the minimum spend before applying for a card.
4. Expiration date: some rewards programs come with an expiration date for rewards. When that date passes, some of the rewards are deleted from your account. Be sure to read the terms and conditions carefully to see if the card you want includes an expiration date on rewards.
How to choose the best card for you
Here are some quick tips to help you choose the right card:
- Before applying for a rewards credit card, be sure to go over your budget. Know what your income, expenses, and debts are, and find the card that fits your spending habits.
- Make sure the credit card works with the stores, restaurants, airlines, etc. that you use most often.
- Look for a big signup bonus, which is offered by many rewards credit cards.
- Pay the balance off each month to avoid getting into debt.
Rewards cards have a lot to offer; it pays to read all the terms and conditions before applying. Don’t hesitate to ask the card company any questions you may have. Choosing a rewards credit card that fits your life, and you’ll be able to enjoy all the benefits it has to offer! For a list of Reward credit cards in NZ visit our Credit card rewards page