Credit Card Rewards Help You Save Money

The “rewards” a cardholder is eligible to receive from the credit card’s issuer, are presented according to the number of purchases the cardholder makes with the card. The variety of rewards offered by credit card companies is virtually endless, but some of the more popular rewards are gas credit cards, air miles or discounts off of the cost of certain airline’s flights.Many stores and retailers also offer "loyalty" rewards if you are using a credit card issued in their name, while some credit cards give you the opportunity to earn discounts on the purchase of a new car. 

The rewards offered by credit card companies can be very desirable to have, but you should ask yourself the question as to whether they are worth you having to spend your money to get.In an effort to answer this question it is helpful to compare the rate of interest charged on purchases made with cards that offer rewards with those that do not have rewards.There is a great number of cards which are offering some sort of reward or loyalty bonus, but the lowest rate of interest on these types cards is likely to be in the area of 15% APR.

This interest rate is about 7-8% more than you would have to pay for a basic low-interest credit card and much more than the zero percent interest rate included with an introductory offer on some other credit cards.Across the whole range of reward cards, the interest rate comparison becomes even more alarming, with some interest rates exceeding well over 30% APR.

It may be worth reconsidering the choice of a credit card that has a lower interest rate and no rewards, if you are a regular credit card user who has to pay these higher interest rates in order to earn sufficient points for desired rewards.If you pay off the whole balance on your credit card before payment is due, the rewards for using the card are actually free because you are not paying interest then.

Unless you are sure that you can pay off all of the total balance on your credit card every month, you may need to use an alternative such as the cash back credit cards.The cash back credit card gives back cash to you according what has been spent on the card each month, and the reward credit card also works basically in the same manner.     

The best cash back rate is currently around 5% on what is spent, and with a 19% APR in interest it becomes very obvious that you are paying a lot to be able to use the card.If you have developed the habit of paying all of your outstanding balances each month to avoid paying interest, you can of course, put the 5% cash back into your own pocket.   

It can certainly be worthwhile to you, when you use the cash back credit cards and those that offer rewards, if you keep paying your monthly outstanding balances consistently and avoid the interest that will be charged.It could be of benefit to your finances, to use the credit cards which offer you some cash back or rewards and you consistently repay the balances on them each time to avoid the interest charge.