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Sorting Out Credit Card Rewards

Savvy ATM: Sorting Out Credit Card Rewards

While it may seem that credit cards lead an innocent existence with the purpose of getting you out of a bind, credit cards companies are not here to help you. That's not to say you can't outsmart them, but CNN Money goes as far to say that rewards programs are in place to entice consumers to charge more on their credit cards and are ridden with traps. A Consumer Reports study released this week noted that rewards programs are not only frustratingly useless for the most part, but the confusing rules and restrictions make most reward cards a waste of time. The Consumerist shared Consumer Reports' seven general tips when considering credit card rewards, and while they're all good points I think numbers three and five are most helpful.

  1. Avoid temptation. Research shows that credit card users will often spend more in their quest to earn points toward their shiny new prize, however, overspending for a freebie doesn't make good economic sense.
  2. Use airline miles fast. If you manage to save up enough miles for a trip, use them quickly. You never know when one of the airlines will change their conditions or go belly-up.
  3. Skip credit card rewards if you carry a balance. Since reward cards often have higher interest rates, the interest on the balance you carry will probably offset any reward. Look for a standard credit card with a lower APR.

There are four more rewarding tips so just

  1. Do the math on do-good programs. Charitable individuals might be attracted to reward cards that give to charities. However, the reality is that they usually pay very low rates. You would probably be better off going with a cash back card and donating the money yourself which would result in a larger donation and a tax deduction.
  2. Favor cash back. Often times, points go unused which is a bonus for the credit card company. However, cash back will accumulate without you having to anything. Consumer Reports also found that cash back cards usually offer better rewards than point equivalents.
  3. Project your spending. Try to figure out how much you will likely spend per year and translate that into cash back points or reward points. Then, calculate how far that gets you toward your desired reward. Don't forget to subtract any annual fees. Move away from any card that makes you spend a small fortune for a minuscule reward.
  4. Consider where you shop. Lean toward cards that will earn rewards at stores and services you use frequently. For example, airline and hotel discounts won't come in handy for those who aren't frequent travelers.
  5. Source

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blu-eyes blu-eyes 8 years
For anyone with children, upromise.com is a great program for acquiring money back to put towards your child's education or even a family member child's education. (I joined for my nephew) You don't have to apply for their credit card just link the card you use the most.
MindayH MindayH 8 years
The annual fee works out for me with my airlines rewards, I pay $65 a year and get about 2 free flights a year - cause I spend a lot, plus put all my business expenses on that card too. And I never carry a balance either
shanimalcracker shanimalcracker 8 years
I have a Citicard Cash Professional and it works out well for me because I get dividend checks that I can cash whenever I've accumulated $50 in rewards. The % that you get for certain types of purchases is decent. The main thing is, I've never carried a balance on a credit card so I don't have to worry about high interest rates. I definitely recommend it if you spend the money and you are good at paying off your credit card charges.
GinaSnyder GinaSnyder 8 years
I'm obsessed with my Chase Freedom!
ilanac13 ilanac13 8 years
i hate credit cards - i had them when i was younger and now i'm stilltrying to pay off the balances, and it's like a never ending thing :( i think that there are too many ploys that companies use to entice consumers to use them and spend more money than they have. what a bad thing...with today's economy, they should feel sorry for themselves for being so bad about this stuff.
skigurl skigurl 8 years
i get free movies with the points i accumulate on my visa...and i find myself charging everything to get points, checking my points balance, and going to see movies and paying for others at the movies because i have the points and i get even more when i pay with visa at a theatre!it sounds terrible but i never carry a balance and i don't spend more than i'd normally spend, i just charge a lot more
skigurl skigurl 8 years
i get free movies with the points i accumulate on my visa...and i find myself charging everything to get points, checking my points balance, and going to see movies and paying for others at the movies because i have the points and i get even more when i pay with visa at a theatre! it sounds terrible but i never carry a balance and i don't spend more than i'd normally spend, i just charge a lot more
RosaDilia RosaDilia 8 years
I'm glad I don't fall for these offers. What I did do one time was the Macy's rewards when you donate to the Women's Heart Awareness Assoc. you get 10% back of the total amount you charge in a year. This came in handy when I had to buy a whole new wardrobe for work. I received a $75 gift card.
bellaressa bellaressa 8 years
Interesting, I always wondered about this, none of my cards have a reward program.
MindayH MindayH 8 years
Never thought about #4 - but that makes so much more sense! I am going to do that, starting immediately!
j2e1n9 j2e1n9 8 years
Get a Wachovia check chard and use it as "credit" when you're shopping, which is basically the same as using it as debit with a checking account... You can get anything under the sun in the form of gift cards etc just for spending $ that you would have anyways. There is nothing confusing or restrictive about it. I am about to turn my points in for a $100 gift card to Saks Fifth Ave! :WOOHOO: www.wachoviapossibilities.com
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