What Is A Reward Card?

A Reward Card is a credit card that comes with a reward program

. Its a strategy to get consumers to use their credit cards over and over again. In order to do this they give you an incentive by earning points which can be redeemed for anything from cash backs to travel points. Before you get enticed into a reward card, you must understand how they work and if they can be effective for you.

The truth about reward cards

Credit cards that have a rewards program may give you a sense of enjoyment. Youre using a card for purchases and youre receiving extra value, HOWEVER, there may be risk involved. Here are some points to consider before signing up for that reward card:

Is there an up front fee?

Some cards carry annual fees which can cost you more than its worth.

Does the card have a high interest rate? If youre carrying a balance this can also cost you a lot more in the long run.

Will you earn points only for a limited amount of spending each month?

Points may not be rewarded when shopping at discount stores or online so you may be paying more for an item when purchasing through a dedicated store through the program.

Cash back cards may only allow you to redeem if you spend over a certain amount of dollars in a year.

Your points may expire if you dont use them or if you miss a monthly payment.

The card issuer can change the rules at any time.

When can a reward card be effective?

The reward programs will benefit you if you actually use the rewards. If you never fly, then having a credit card that rewards you with air miles is virtually useless.

If you receive points for shopping at specific vendors, then make sure that youre a regular at that vendor.

Choose a card that you can accumulate points that never expire.

When you choose a reward credit card that has no up front fees, annual fees or high interest rate then you can simply collect points when you can to possibly redeem them in the future. Sometimes you may receive a free movie pass or a $20 gift certificate to your favourite local restaurant.

Its also important to remember that most of these cards are reserved for people with the best credit and you may need to repair your credit before getting the best card out there for you. Prudent Financial Services is the leader in loans to people with bad credit histories and their goal is to help you restore your credit.

For more information, please visit www.prudentcreditrepair.ca

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