Pros and Cons Of Reward Credit Cards

Advantages of Reward Credit Cards

Earn from Your Purchases. One of the most ideal features of a reward credit card is that it lets you earn from your purchases. This is especially true from cash back credit cards because with each dollar you spend on your card, you get a corresponding point. When you’ve collected these points, you can either exchange it from a credit card’s redemption store or use those points as cash to buy products and gadgets.

Get Discounted Rates. Reward credit cards often give rebates with each purchase you make. This means each time you buy an item, a certain percentage is given back to your account. Just like cash back points, rebates can be used to make new purchases or pay off your credit card balances.

Travel for Free. Travel reward credit cards work much like a cash back credit card where the card holders collect as many points as he can from his purchases. However, instead of cash, the points are equivalent to mileage. When you’ve collected the minimum number of mileage points needed, you get an instant free travel ticket from the credit card issuer’s sponsor airline.

Get Additional Privileges. Aside from cash and rewards, card members are given exclusive privileges that non-reward credit card members do not enjoy. For instance, the reward package includes travel accident insurance, car rental insurance, card and cash emergency replacement, no liability on unauthorized charges and others.
Disadvantages of Reward Credit Cards

High Annual Fee. Reward credit cards can have a very expensive annual fee. This is why it’s important to find ones with low annual fee or no annual fee at all. Yes, there are reward credit cards with great deals and does not require an annual fee be sure to look for them.

High Interest Variable Rates. Aside from annual fee, interest rates can also be costly. Most reward credit cards come with variable interest, so the rate you’re paying today can become really expensive in time. Watch out for reward credit cards that offer a low introductory rate but rises dramatically once the introductory period expires.

Reward Limitations. Another thing to watch out for is the limitations on collecting and redeeming rewards. There are credit cards that promise to give generous points until you reach the maximum amount allowed. For instance, you may be given 5% rebate per dollar spent but only until you’ve reached $1000. By then, no matter how much you spend on your card, no points will ever be given. Some credit cards also forfeit points after a limited time period. For example, unredeemed points for the whole year will not be rolled over for the next year, which means all the points you earned will just go to waste. These limitations are not openly stated unless you read the terms and conditions. So no matter how exciting the offer seems, take your time and make sure that there are no such unreasonable terms before signing up for any reward credit card.

About Jessie Masterson is a writer, and has been engaged in to reward credit cards. She has been giving out reviews on some of the best credit card reward. She currently shares her articles in rewards credit card site and helped out some people who don’t have enough knowledge about credit card rewards.