A good credit reward card can contribute to your retirement account, offer gas rebates, score theme-park or vacation tickets or take
thousands off the price of your next auto purchase. Rewards at hotels,
airlines, and retailers bring more to the possibilities but, adds to the
confusion. Here are some tips to find the best reward programs for you
and to increase your buying power.
Who should apply for reward cards?
It used to be that if you pay off your balance each month, reward cards
are definitely worth considering. But now, many have come out with very
competitive interest rates below 10 percent, so if your credit is good
enough to qualify, you need not necessarily discount a rewards card, unless
it hinders you from paying down your balance in any way.
Invest some time to maximize payoff
Anyone who wants to get the best deal must patiently compare offers,
then managing them afterwards. Scrutinize spending to give maximum rebate
value for the dollar.
Frequent-flier miles were the first of the rebate credit cards. They
are typically valued at 1% to 2% rebate or one mile per dollar spent, so
choose the ones that offer the highest return. For a list and comparison
table of airline mileage cards, see SpyFind's
Airline Rewards Finder.
Some airline cards have a “use it or lose it” policy, as do many “travel
rewards”. If it will take you a long time to earn your reward, you
will want to make sure it will be there for you. American Express and Diners
Club, for example, have frequent-flier programs with miles that never expire.
If you have to use a number of different airlines, you might go with
American Express or Diners Club, which provides miles that, can be used
on a number of different airlines. Diners Club also gets you into airport
lounges worldwide. If you travel different airlines but need a Visa or
MasterCard, which are accepted by more merchants, you can choose a bank-issued
card that has an affiliated “travel awards” program.
About Auto Rewards
“The ‘car cards,’ for example, tend to be the most generous reward
cards in terms of what percentage rebate you earn -- but the reward has
its limits. The GM
Card lets you earn 5% toward the purchase or lease of one of its vehicles,
but then yields how much you are allowed to apply to a given vehicle. Only
$1,000 in rebate awards currently can be redeemed on a new Hummer or Corvette,
for example, while $3,000 can be used to purchase a Silhouette minivan”,
according to Liz Pulliam Weston of MSN Money.
Auto Rewards Finder.
If you want more freedom in the type of car you would like to purchase
then consider The Citi
Driver’s Edge Platinum Select Card, which gives you a 1% rebate, up
to $500 per year, toward the purchase of any new or used car.
You can always switch to another card with a different rebate program
after you have reached the maximum reward to keep the discounts but still
Calculate your spending to make the rewards worthwhile
If you charge $3,000 a year on a card that costs $45 annually, for
example, it will take over 6 years to earn a free airline ticket with most
cards. In that time, you will have paid $270 in fees -- enough to buy a
discounted air ticket on your own.
Get cold hard cash
The easiest way to accumulate true savings is by taking advantage of
no-fee cash-back cards. You will want to choose a card that gives you at
least a full 1% back; such as, Chase
Platinum PerfectCard. Or, 5% to 10% with increased spending or
used with participating merchants and retailers; such as, Blue
Cash from American Express.
Cash Rewards Finder.
Toys R Us Visa, has no annual fee and its 1% cash back rises to 5%
when you use it to make purchase at any Toys R Us.
Disney and Universal
have credit cards that give you points toward theme-park tickets, movies
and other great stuff.
For greatest flexibility, the cleanest reward is "cash back"—not a gift
certificate but real, use-anywhere money.