How to Choose a Suitable Reward Credit Card
AT&T Universal Card initiated the idea of paying rewards to credit card members for using their credit cards. They did not charge any annual fee, a new concept at that time, and gave cash back on all purchases that could be used towards your phone bill. But it was Discover Card that actually pioneered the idea of giving back to the cardholders, a certain percentage of the total amount of card charges, as cold hard cash. Since then reward credit card offers have caught on and become very popular in attracting customers. One of the most popular deals is of 5% cash back reward. Today Discover Credit Cards have cornered the biggest market share in cash back programs. Visa and MasterCard issuers also offer different programs.
There is a lot of competition between the credit card companies vying for new card members. These companies take credit card rewards paid to the cardholders as a cost of doing business to increase their customer base, which use credit cards on daily basis for purchases and are inclined to settle the balances each month.
How do you choose a reward credit card program that suits you?
It is very important to scrutinize your spending pattern and habit. Paying off your balance on your reward credit card each month offers you the best interest rate and becomes a better way of spending. Not doing so, will give you a poor rate since it becomes expensive for the banks.
Reward credit cards have different programs giving you options to earn the \"currency\" on your purchases. They give one point per dollar spent on the card with different redemption options. Many shopping sites offer you merchandise, airline tickets or even cash towards redemption of your points, like the American Express Blue Card. Some give you gift certificates, which can be exchanged for items on their site, such as a Citi Diamond Preferred Rewards Credit Card where 5000 points equal a gift certificate worth $50. Certain companies award more points per dollar if you purchase with the partner company.
Banks have affiliated themselves with scores of big companies like airlines, hotels and retailers etc offering rewards in form of points which can be redeemed towards products of that partner company. Thus choosing the most suitable reward credit card would depend on where you shop and which reward credit card that awards you most points.
