Financial success is not just about how much money you make or how much you can cut costs.
Income and budgeting are important, of course, but doing well financially is also about making the best decisions possible at any given moment. And when it comes to savings and rewards, that means not leaving any money on the table.
This is where credit card rewards come in.
If you are spending without taking advantage of perks like cashback, discounts and other rewards, then you are missing out on a huge opportunity. Read on to learn about reward credit cards and why they are important in day-to-day finances.
How Do Reward Credit Cards Work?
Like their name suggests, reward credit cards allow you to make purchases and be rewarded for doing so. These rewards are often quite valuable. If you use them correctly, you can end up saving a lot of money in the long-run on items you were going to buy anyway.
Each credit card company will offer different reward schemes on different cards. These may include perks like:
- Travel miles.
- Referral bonuses.
- Signup bonuses.
- Minimum cashback rewards.
- Additional cashback through partners.
- Reward points.
Of these, the most common is the reward point system. As you spend, you will be given points which can be redeemed for products, services or account credits. Some of the best reward credit cards have great point systems offering customers as many as one point per dollar spent.
Currently, the Capital One rewards card is thought to be one of the best since it offers $150 cashback after your first $500 spent as well as an impressive 1.5% cashback on every purchase.
Additionally, the Disney Visa card is an excellent option for anyone looking for brand rewards such as money off Disney vacations and discounts on merchandise. What’s more, the card rewards customers with $200 cashback after their first $500 spent.
Similarly, the Citi rewards card gives some great benefits. Most notable is their generous point system, which offers an introductory 2500 points as well as bonuses like 10 times more points for online shopping — all of which can be saved until you wish to redeem them.
Learn About Travel Cards
One of the most beneficial things about a rewards credit card is that many of them give you the freedom to travel at a lesser expense with many reward schemes and incentives.
A lot of travel cards will give you the advantage of being able to upgrade your flights and accommodations, along with other perks that make them ideal for those who are frequent jet setters.
One of the best travel cards is the Capital One Venture card, which gives 5 times more miles on rental cars and hotels, as well as charging no foreign transaction fees.
While this card is good, though, it is beat out by the American Express Travel Card, which comes with a $250 annual fee but offers some excellent incentives, such as 4 times more points at worldwide restaurants. It also provides as much as $1,250 baggage insurance, making this one of the best airline credit cards alongside the Citi AAdvantage.
The AAdvantage card from Citi gives users double points when booking with American Airlines, as well as extra points on gas and rental cars. That being said, this card also comes with an annual fee of $99 but is free for the first year.
Learn About About Balance Transfer Cards
A balance transfer allows you to pay off one credit card with another as a way to avoid rising interest rates or other types of fees.
Balance transfers are common practice in the world of personal finance but should only be done if the new credit card offers a low or zero interest rate for these transfers. This can be done by shopping around to find the best balance transfer cards currently available.
When choosing a balance transfer card, you also want to make sure that the 0% intro period is long enough to allow you to pay off your balance. If you do not pay your transferred balance before the intro period ends, you may be charged a large interest rate that could undo your progress.
One of the best balance transfer cards is the Citi Diamond Preferred Card, which offers a 0% initial balance transfer for the first 18 months.
The Capital One balance transfer fee comes in at 0% for the first 12 months. This is less time than many other balance transfer cards offer, but it may still be enough for you to pay off your balance depending on your situation. For some customers, however, there is a 2.9% balance transfer fee, so it pays to be savvy and keep an eye out for credit cards with no balance transfer fee if you can.
Learn About Cashback Cards
A cashback credit card rewards you by repaying you a percentage of the money you spend when using the card. There are many cashback cards available, but shopping around for the best cashback credit card will allow you to reap the biggest rewards.
Your shopping habits will determine the best type of cashback card for you. For example, some credit card companies offer a small amount of cashback (around 1%) for all purchases. Others offer a higher percentage back (2% – 5% or more) but only on certain purchases, such as groceries or gas.
Still others give you the best of both worlds with a minimum cashback amount on all purchases and additional cashback on purchases through their partners. These often rotate every month, so you will always have new choices to choose from to maximize your savings.
It will come as no surprise that the Capital One Quicksilver card is thought to be one of the best cashback credit cards currently available with 1.5% cashback on every purchase, as well as an initial bonus of $150. However, sneaking up alongside the credit card giant is the Discover It cashback card, which gives an impressive 5% cashback on everyday purchases, as well as 1% on other types of spending.
If you are looking to reap a high reward, the Blue Cash Preferred Card From Amex gives 6% on all supermarket purchases up to a value of $6,000 annually, making this a great option for big spenders. Additionally, the card offers between 1% – 5% on purchases including gas, taxis and streaming services.