7 Tips of Using Reward Credit Cards - The Smart Way

Credit cards with reward programs were designed to attract consumers to open an account. It is credit card issuers' way of thanking their loyal cardholders. There are various types of reward programs which can be found in the market. The most popular ones are the Cash Back, Frequent Flyer Miles, and Gas Rewards.

If you plan to apply for a reward credit card, listed below are some tips to help you get the most of what your credit card has to offer:

Don't carry a balance. If you frequently carry a balance each month, you may end up spending more than what you earn from the rewards. This is because reward credit cards have higher rates of interest than regular credit cards. If you have to pay the extra interest cost each month, then you may be better off with a non-reward credit card with a low APR.

Know what "UP TO" means. Some reward credit cards offer points or rebates "UP TO" 5% or more. IT is easy to get enticed with such offer, considering that 5% is a great deal. Nevertheless, the term "UP TO" refers to the maximum number of points or value of rebates that you can earn. IT does not necessarily imply that you will get the full 5% all the time. Keep in mind that it is conditional and subject to the terms of your issuer.

Check out maintenance costs. How much would you need to pay on a regular basis in order to keep your reward credit card active? Some credit cards with reward carry annual fees ranging from $80 to $100 or higher. If you have to pay that much every year to keep your account, is the rewards card still worth keeping? Will the maintenance fees offset the rewards you earn?

Frequent flyer miles reward isn't for all. Before signing up for a credit card with Frequent Flyer Miles program, seriously consider if the rules match with your lifestyle. If you're not much of a traveler, then it may take you a very long time to collect enough points to qualify for a free flight. In fact, you may not get the chance to earn your free travel reward on time as most airline miles credit cards impose blackout dates.

Watch that limit. All reward credit cards have specific limitations. For instance, you may only be eligible to earn a certain number of points or value of rebates each month. Once you've reached the maximum points or rebates, you may stop earning points even when you continue charging purchases to your credit card.

Understand the terms and conditions. The advertisements may be hard to resist but if you don't take the time to read the fine print, you may find yourself stuck with the wrong credit card. Keep in mind that different reward credit cards have varying systems. What works for one person may not work for you. This is why it is very important to consider your personal spending style before choosing a reward credit card. The only way you can compare reward credit cards accurately is by understanding what the fine print says.