Credit cards are one of the greatest financial tools and have become a necessity for individuals these days. They not only help an individual overcome their financial crunch but in return awards them various benefits so that they continue to use their credit cards. Several emails keep piling up in your mailbox regarding credit card offers and sometimes you are also triggered by SMSs that keep you attracted to credit cards. Credit Cards are famous not just because they help individuals deal with a situation wherein they are low on their finances but, they also provide them with various rewards in return for using a credit card.
Now there are various kinds of reward programs, such as a credit cardholder will get reward points with respect to each purchase he makes using his credit card, or he is entitled to get cashback on the transactions that he makes through a credit card, or he can also earn miles while he uses his credit card which can be further redeemed against the partnered Miles Program. But apart from just knowing that he can earn rewards (in any form) while he uses his credit card, he should also know which card should he opt for on the basis of his needs and his spending pattern. Tn earn rewards (in any form) while he uses his credit card, he should also know which card should he opt for on the basis of his needs and his spendhis is because for every new credit card he will go for, a hard inquiry will be placed on his credit report, irrespective of the fact that you get approved for a credit card or not.
Therefore, an applicant, before applying for a credit card should well analyze his /her spending pattern and should mandatorily hover between the credit cards of different banks and find the credit card that provides him the maximum benefit (on the basis of where he spends using his credit card) while he continues to make regular spends using his credit card. In this article, we are going to discuss what an individual should consider or what questions should he ask himself before applying for a new rewards credit card so that you exactly know how you will be able to maximize its value. Keep reading to know more about this in detail.
Important Questions To Ask Yourself When Choosing A Rewards Credit Card
There are various important questions that you must ask yourself before you apply for a credit card. This is because one should be very clear in their mind that why they want a credit card and whether or not they will be able to take responsibility for owning a credit card. We will discuss a few questions in the article below after which you will have a clear picture in mind that why should you opt for a rewards credit card.
Where do you spend most of your money?
The first and foremost question that you should ask yourself before opting for a credit card should be where you spend the most of your money. If you are frequently on the roads because of your work or vacation, you should go for a fuel credit card, or if you are a person who liked to dine outside, then you should choose a credit card that earns you great rewards while you pay your dining bills using your credit card. There are multiple types of credit cards available in the market. One should choose a credit card that enhances their earnings.
An applicant should know how many reward points will he earn using a particular credit card while he makes purchases using it. For example, some credit cards offer accelerated reward points while they spend on some specific category using a particular credit card. Hence, an applicant should consider choosing that particular credit card that will provide him higher reward points on his specific spending.
Value of Reward Points
Now that you are constantly using your credit card to earn reward points, you should be well aware of the fact that what is the monetary value of the reward points that you earn. You should pay close attention to the redemption rate of the reward points. Generally, the reward points that you have earned are redeemed at a rate of 1 Reward Point = Rs. 0.25. But then there are some high-end credit cards that provide you a reward redemption rate that is higher than this rate. Not just against cash, credit cardholders have the freedom to redeem the earned reward points against various products and vouchers, wherein the redemption rate is different from the rate that you get when redeemed against cash. You can purchase the products and vouchers of your choice from the respective bank’s website by using the reward points that you have earned.
Fees linked to the rewards credit card
Because the reward points have quite a lot of value, therefore the fees and interest rates linked to these credit cards are also quite high. A credit card applicant must go through the detailed terms and conditions of a specific credit card in order to have proper knowledge of all the fees and charges linked to the particular credit card which he is going to apply for.
Important Points to Note In Case Of A Rewards Credit Card
Every credit card, whether a rewards credit card, cashback credit cards, or a miles credit card, has some specific points that an applicant should know of before he applies for such kind of credit card-
- The reward points that you earn with a rewards credit card are not valid for a period of a lifetime. These reward points come with an expiry date. Post this date, cardholders will not be able to enjoy the benefits of these reward points. In general, these reward points are valid for a period of 2 years but in the case of some credit cards, the validity of these reward points may go up to a period of 5 years. Hence, if a credit cardholder would want to gain maximum benefit out of credit card reward points, he should redeem them before they expire.
- For every reward redemption request that credit cardholders place, they might have to pay a reward redemption fee. However, some card issuers don’t charge any fee for redemption of rewards, but some of them do.
Credit cards are excellent financial tools to deal with a situation of financial crunch and also where cardholders can earn great rewards while making payments using their credit cards. Apart from this, these cards also help an individual to build credit. Selection of the best credit card for self is the most important step in the journey of credit cards. You should do thorough research in this field before you choose the one that will provide you with the maximum benefits. Also, cardholders should take care of the redemption of reward points as they should be redeemed before they expire otherwise you will not be able to take advantage of the reward points.