Reward Credit Cards: How to Choose One?

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If you’re in the market for a rewards credit card, you’ve probably heard about all the different types of rewards out there. There are cards that offer cash back, points, miles and more. But how do you choose? Rewards can be broken into three main categories: cash back, points and travel miles. Each one comes with its own benefits and drawbacks so it’s important to assess your spending habits before deciding which is best for you.

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What type of rewards do you want?

Points, travel rewards and cash back! That’s the holy trinity of rewards cards. If you’re looking for a credit card that will help you earn free flights, hotel stays and other perks, then look no further than one offering travel rewards.

But suppose you’re more interested in earning cash back on everyday purchases. In that case, there are options out there like 3% cash back credit card that offer up to 3% cashback —and sometimes even more—on certain categories like gas or groceries (though this may come with an annual fee).

Can you manage the varying reward structures?

The flipside of variable reward structures is that they can be a little more complicated than fixed. If you’re organized and like keeping track of your rewards, this might not be too much of an issue for you; otherwise, it may be wise to stick with a card with a fixed rate structure instead.

Do you carry a monthly balance?

If you carry a balance on your credit card, then the interest rate is, of course, an important factor to consider. If you pay all of your charges each month in full, then it won’t matter what the interest rate is — you won’t be paying interest at all.

But if you tend to carry a balance, then it will be important that the card has an affordable monthly minimum payment and reasonable interest rates that don’t break your budget.

Are there any additional fees involved?

Credit cards charge fees for a variety of reasons. Some are unavoidable, and some can be avoided. As per SoFi professionals, “Don’t fret. Getting started will only affect your credit score if approved.”

  • Annual fee: This is the one fee that you will not find on a cash back or rewards credit card. Every card owner must pay an annual fee to use the card to its full potential because it’s how the bank makes money off your purchase. The amount varies by provider and type of card (debit vs. credit), but it’s typically $95-120 per year, payable all at once or monthly, depending on what kind of account you have with them (e.g., individual vs. joint).
  • Foreign transaction fees: When you travel overseas, this fee covers any purchases made outside of your local country’s currency so that they can be converted into dollars before being deposited into your account back home, where you live!
  • Balance transfer fees: If you need to pay off debts from another creditor in full with one lump sum payment instead of making monthly payments over time, then this is going to cost you some extra dough upfront before anything else gets paid off!

In the end, no one reward credit card will fit every consumer’s needs. You need to think about what type of rewards you want and whether or not this card has a value proposition for you. If it does, then go for it!