Three Important Factors When Evaluating Points Based Credit Cards
Knowing how to evaluate a points-based rewards cards can help you to sign up for the right one. It will help you to reap the most rewards out of its rewards program. Every card has the different rewards program and different requirement to earn the points. These points can be exchanged for statement credit, cash back or other free stuff. The following are 3 factors on how to evaluate points based credit card.
1. Types of Rewards Program
The first thing to consider is what type of rewards program the card has. Cards that offer cash back on rotating bonus categories require you to spend money in the selected bonus categories of that quarter to get cash back. Flat rate cash back cards offer a flat rate cash back on everything that you purchase.
Travel rewards cards, on the other hand, allow you to earn miles that can be exchanged for free flight tickets. It is important that you know how the rewards program generally works prior to signing up including how much point you earn on per dollar spend, what categories can earn you point and how many point you need to collect to redeem the rewards. You may also enjoy other perks like access to airport lounges, VIP privilege to concerts, and etc.
2. Types of Fees
Secondly, you must consider what type of fees are being charged on the rewards card. Common fees are annual, foreign transaction, late and penalty fees. The annual fee can reach up to a few hundred dollars. If you want to apply a card with expensive annual fee, make sure the rewards that you earn can cover it.
If you want to take the card overseas, make sure it doesn’t charge any foreign transaction fee. Late and penalty fees are charged when you wait until after the grace period to make repayment. You should try to pay on time by the due date to prevent your credit score from dropping. You can call the customer representative to confirm the fees that are charged on the card.
3. Check the APR Interest Rate
Thirdly, you must check the interest rate. When you get preapproved for the card, they will let you know the estimate interest rate. You can get preapproved for 3 – 4 cards to compare the interest rates. Some rewards cards have zero percent intro promo so you don’t have to pay any interest for a specified period.
The interest fee is only charged when you roll over the balance to the month. If you pay your balance in full, you don’t have to pay the APR interest fee. Comparing the interest rate via a credit card comparison site can help you to save a lot of time.