How to Know which Rewards Card to Use

INTRO: If you’re like me, you’re inundated with plastic cards claiming to provide ‘rewards’. You’ve got them in your wallet, on your key chain and stuffed in your purse. They’re issued by supermarkets, gas stations, airlines, drugstores and so on. Each card comes with its own program, too, which means you’ve got to read endless amounts of fine print just to figure out how to use them. The truth is, many aren’t really worth it.

STEP 1. Figure out if you’re going to get points or cash with a rewards card. If it’s points, how many do you need in order to get something? Then, ask yourself if it’s realistic you will spend that much. What’s even more important, ask yourself if you can afford to spend that much. If a rewards card causes you to overspend, you are not going to reap any reward.

STEP 2. If you have the choice of a card that offers points and one that offers cash, take the cash. Statistics show that many people never redeem their points at all either because they forgot or because they never had enough for the thing they really wanted. If this happens to you, you may have wasted money telling yourself you’re going to get a reward.

STEP 3. If a credit card promises rewards, check and see if it has an annual fee. If a card is going to cost you more than you can recover in rewards, it isn’t a good deal. If you’re someone who tends to carry a balance, be sure to check the interest rate on a card offering rewards. If the interest rate is high, you could end up giving back more in interest than you could possibly earn in rewards.

STEP 4. If you have a card that promises to give the rewards you earn to charity, calculate what that might be for the money you will spend. Often it’s true that the charity will get very little making it more of a marketing stunt than a real program. You can’t write it off on your taxes either.

STEP 5. Some large retailers offer more than one card with different rewards, earning levels and rules. If it’s all too dizzying to figure out, pass them up. You’re probably better focusing on one or two programs rather than dispersing your purchases across multiple rewards programs where you’ll never earn enough on any of them for it to matter.  

TIPS: Keep the cards that are really worth it and throw out the ones that aren’t before they drive you nuts.

WARNINGS: Always remember that the companies that offer rewards are not trying to do you a favor. They’re trying to get you to spend more by offering you the incentive of a reward.

Comments (1)

cynthiantristan said:

	... The cards I love are the ones that supermarkets give for you to save money. For example a cereal that naturally costs 4.50 is on sale for 1.50 with the card. Great savings! Great article and thank you for sharing, some people need to know this.
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December 31, 2009
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