01 Mar How to Pick the Best Rewards Card
There are so many Credit Cards to pick from, that when you’re considering getting a new one, you can feel overwhelmed from all of the options. You’re constantly being bombarded by commercials trying to convince you which ones are the best, getting credit card applications in the mail, and it can leave you confused.
Decide what rewards are most important to you
The best credit card for your neighbor might not be the best credit card option for you. You’ll always want to do research on a credit card before applying.
There are three different main types of credit cards.
Cash back and fixed-value cards. These are really simple. You’ll get a certain allotment of points for every dollar spent, usually a 1:1 ratio. When these points have accrued, you can use them. Spending $1,000 would get you 1,000 points, which equals $10.
Cobranded credit cards. These align with hotel or airline companies. They usually have a much higher point system, making more than just $0.01 for every dollar spent, and they come with perks in the rewards system for whatever company it’s connected to, such as elite status, free checked bags, or priority boarding. These types of cards are preferred by people who travel a lot, because you can easily earn points towards free flights/cars/hotels.
Transferrable points cards. Most of these cards will let you put the points towards any airline or hotel, or redeem the points for cash. Most of these cards charge annual fees, so you have to figure out if the points you’ll earn will outweigh the fees you’ll pay, to see if this is the best option for you.
Be strategic with your choices
Don’t pick an airline credit card if you hate flying with that airline. But if you already have elite status with an airline and one of the perks with the card is elite status, you may want to pick a different card, since you already have this perk. For someone who travels internationally a lot, you’ll want to select a card that has no foreign transaction fees, because you’ll end up spending enough on those fees that it’ll outweigh the points you earn.
One important thing to remember is that when selecting a card, this isn’t the only credit card you’ll ever have. Don’t apply for more than one at a time, because this will affect your credit. But if you have a card and you realize it isn’t what you wanted, you can always get another credit card and use that one instead. Closing a line of credit can hurt your credit, so instead of closing the credit card, call the company and see if you can downgrade to a simpler card without annual fees. This keeps your line of credit open(and your credit score high), and you can use the card that has better perks.