End users have more choices than ever before when it comes to credit cards. The most common things are rewards. Rewards credit cards offer incentives or rebates just for making purchases. The consumer will accumulate points for every purchase. Points may be converted as reward points, cash-back, and travel rewards are the most common forms credit cardholders are rewarded.
With so many credit cards option for you to choose from, can there ever be too much of a good thing? Before you apply for a credit card, it’s important to look at the rewards you’ll receive. The last thing you want to do is spend months – or years – accumulating rewards, only to find you can’t redeem them for what you truly want.
We listed some signs to be on the lookout for when selecting a rewards credit card.
Rewards you’re Not Able to Use
The Scotia bank Scene Visa is a great credit card – if you enjoy going to the movies. For those who are seldom visiting the cinema, it makes better sensed to choose a credit card with rewards you’ll actually enjoy. Likewise, what probably doesn’t make sense to get the Harley Davidson MasterCard when you’ve never or hardly ridden a motorcycle.
If you are unsure if you’ll ever be able to use the rewards or perks along with your credit card, your best bet is a cash-back credit card. With most cash-back credit cards you are not limited in your reward redemption– you can use the cash reward as you see fit.
Annual Fees More Costly Than the Rewards Earned
Earning rewards will make sense as long as the rewards are worth more than your annual fee. Usually, most premium credit cards come with an annual fee – It is a must before you sign up or apply for a credit card, you should ask yourself whether you’ll get your money’s worth. Make it a habit to review your credit card statements for your spending over the last 12 months to see if the rewards you’d earn under the new credit card would be worth it.
If you are spending a huge amount on a premium credit card can make sense, but if you’re an average spender, it might be better to try a traditional rewards credit card come with no annual fee. There are some premium credit cards in Canada that will waive the annual fee for the first year to win you over – once the introductory period is done make it appoint that keeping the card would make sense.
Credit Cards with Reward Caps
Some reward credit cards have reward caps this means limiting your reward earnings when you reach a set spending limit. If you’re a big spender, it’s important for you to know this as it might make sense to spread or divide your spending over more than one credit card – or avoid the card altogether. These types of caps are becoming rare due to credit card competition heats up, but it is something to be aware of.
More frequently, there are credit cards with minimum spending thresholds. Once you reach the set Threshold, you may start accumulating higher rewards. For example, if you might earn 1% cash-back on for the first $4,000 spent and 3% cash-back on any amount above. If you’re an average to a low shopper, it would be better off choosing a credit card with higher rewards right off the bat.
Rewards with Expiry Dates
What use could be a rewards credit card if you’ll be able to redeem your points before they expire? If you’re a coffee spender, it can take you months – or maybe years – until you’ve earned even reward points to redeem
Although credit card agreements come with the mandatory information box that provides important information, it’s up to the cardholder to ask questions and read the fine print when it comes to rewarding point expiration. It’s the cardholder’s responsibility to monitor when your rewards will expire; your credit card issuer isn’t likely to send you a friendly reminder.
Rewards with Limited and Costly Redemption Choices
One of the biggest complaints with reward cards is limited and costly redemption options. You could spend years accumulating reward points towards your dream vacation, only to find out it will cost you almost as much to redeem your reward points than it would pay your own way. You may also be limited to choosing from select airlines, making it difficult to book the flight you want.
The Bottom Line
Credit cards are a great way to earn rewards from everyday spending, as long as the benefit of those rewards outweighs the cost and has lower interest rates. When picking a rewards credit card, it is very important to choose wisely to make sure you’ll get your money’s worth. The last thing you want is an unrewarding credit card that will cost you more than the rewards you’ll earn especially if there is an annual fee included on your card. It is also important to always check on your credit report at least twice a year. Always make sure to pay on time and you feel like you are most likely maxing out your spending limit. Talk to a credit specialist in Canada to help you and guide you for a credit card for bad credits or poor credits.