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Reward Credit Cards
 Dec 17, 2008

There are many different types of reward credit cards. Some reward cards offer incentives such as free gas, travel, shopping, and cash back. This article will review the pros and cons of reward cards as well as how to get the best rewards using your card.

All credit cards are not created equal, reward cards offer you benefits just for using your credit card. If you take the time to select the right credit cards, and use them properly, you can actually gain great benefits. Reward credit cards are the best ways to get the benefits of using a credit card. As you use your credit cards, you accumulate points that you can then use to pay for travel, consumer goods and even get cash back.

Types of reward credit cards

There are different types of reward credit cards. Which type that you get depends on your needs, and what would most benefit your personal situation. Here are some of the rewards you can get:

Gas rewards. With the price of gas on the rise, gas reward credit cards are becoming increasingly popular. You can earn credits toward fill-ups, or get a certain amount of money (usually between 5 and 15 cents) off of the price of each gallon of gas. These rewards cards can help you save money on transportation costs.

Travel rewards. Turn in your points for travel rewards. You can get discounts on hotels, airfare, rental cars and other forms of travel. Some reward credit cards allow you to turn in your rewards for free travel, and others will reimburse you through a statement credit when you redeem your points for travel you have already taken.

Shopping. Some reward credit cards will give you points toward retail shopping. Some send you coupons in the mail, and others will let you pick certain items for free or at a discount. Others will send you a voucher.

Home improvement. It is possible to earn points that can be used for home improvement purchases. These reward credit cards are especially popular from home improvement warehouse stores. These can allow you to buy the materials needed to spruce up your home.

Cash back. Other reward cards offer to send you check. You get anywhere between 1% and 5% cash back on certain purchases made with your reward credit cards. Once you reach a certain amount of cash back, the credit card company sends you a check.

Gifts for others. You don't have to do reward credit cards for just yourself. You can help others without spending extra money when you look into charitable reward credit cards. Some credit cards are issued so that a portion of the money you spend is donated to the worthy cause of your choice. You can also have reward credit cards that donate to a college that you support, or even to a particular college student that needs help paying for college.

Using your reward credit cards wisely

It is important to note that the value of your reward can be destroyed by interest charges. Instead of spending a lot of money to get the rewards, and then carrying a balance from month to month, it is important to pay of your credit card monthly. A 5% cash back award doesn't mean much if you are paying 15% interest on your credit card balance. The only way to avoid this is by paying off your balance each month. Then your reward credit cards are purely benefiting you. Also, note that if you go over your limit, you will not be able to access your rewards points until you are back in good standing.

One way to make sure that you are using your reward credit cards wisely is to use them only for purchases you normally make. You can use the card for groceries, paying bills and other necessities. These are items that should already be figured into your budget. They are things that you would buy anyway each month. Put those items on your credit card, and then pay it off every month. That way you receive benefits for doing things you would do anyway.

Another thing to watch out for is diluting your reward credit cards. If you have four or five credit cards, all of them earning rewards, you will reduce the overall effectiveness of the rewards program. Instead, choose the rewards that you feel will benefit you most, and then concentrate your efforts on those one or two credit cards. That way you will accumulate points much more quickly, and you will be able to cash in your rewards.

Like many other items having to do with money, reward credit cards are just another tool. How you use them can make a big difference in whether they are a burden or a boon. Carefully choose which reward credit cards you will use, and use them wisely. And enjoy the benefits that come.

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