Free Reward Credit Cards
With Mileage, Points, and Cash Back
Would you like a free credit card that offers you a reward whenever you use the card? These rewards come in the form of cash back, frequent flyer mileage, or reward points to accumulate and use for later purchases. Banks offer free rewards credit cards to encourage their use. You could say that rewards credit cards pay you to shop.
Of the different free reward credit cards available, the most popular programs offer cash-back, where customers receive a percentage of their purchases back in either a check or money off of their next bill. Other reward cards credit you with points based on how much you spend. These points can be redeemed for various merchandise, or used to obtain discounts at certain hotels, stores, restaurants and gas stations.
Free Rewards Credit Cards Pay You to Shop
There are many free credit cards that offer a reward of some kind. The reward can be a discount on gas, free hotel lodging, or free airplane travel. The most unusual credit card reward allows you to accumulate reward points to spend on a lottery, and to play at the World Series of Poker in Las Vegas. With some credit cards, you can even get a reward when you charge your federal income tax payment to the card.
The best time to consider a free rewards credit card is when you plan an expensive purchase. Wedding expenses, new jewelry or household appliances can qualify for rewards if you charge them to your credit card. If you dine out at fine restaurants, if you travel often or if you have a large discretionary income to spend on luxuries, you can benefit from a credit card that pays rewards. Some families charge their grocery purchases on credit cards and happily count up their reward points. If you have substantial gas purchase, a gas rewards card can be helpful. Usually, the gas card restricts you to purchases at participating companies.
It is easy to be overwhelmed by the variety of credit cards, the terms of the cards and their reward offers. If the paperwork is really complicated and you're not going to figure out how to use those rewards, you don't need a rewards card.
A reward credit card will be to your advantage only if you pay off the balance in full each month. That's because reward cards usually charge somewhat higher interest rates on the unpaid balance and higher fees. On almost any card, the interest you pay for one month is always much higher than the value of the reward you receive.
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The Best Reward Credit Card Pays Cash Back
In general the best reward program is one that returns cash to you. The cash payback is usually more valuable than the points that other plans offer. The cash you receive is worth more than miles or discounts, and there is more hassle to manage a points plan. Points often go unused, while cash rewards accumulate without you having to do anything. A cash-back card is likely to be good in more places, too.
For example, one major plan now offers 5% cash-back at supermarkets, gas stations and drugstores, with 1.5% cash-back on other purchases. But to get the higher reward, you have to spend $6,500 a year on the card. If you don't spend that much, the cash-back reward is 1% and .5%.
Here's another example. A major bank gasoline card offers 6% cash-back on gas purchases for the first 90 days and 3% on gas after that. Other purchases earn 1%. After the first 90 days, the cash-back limit is $15 per month.
If you want a free rewards credit card, you'll save time and energy with a cash-back plan. Choose a rewards card that has no annual fee and a reasonably low interest rate for purchases and balance transfers. Interest rate vary from 9.74% to as much as 19.99%. Be careful; the annual fee on a credit card can be more than the rewards you earn.
Rewards Credit Cards that Offer Points
There are credit cards that offer you rewards like gasoline, use of a hotel, airline miles, and any other incentives you can think of. The cards may offer double rewards if you spend your points at participating retailers. As an additional incentive, the credit card may offer you a teaser introductory rate with extra reward points.
In a free rewards program, a point is typically worth about a penny. If you spend 25,000 points for an reward item, it should be worth about $250 in cash. You can often earn the best return with a card that offers miles for a single airline or points toward a specific type of gas. Gift cards can also be a good option, because you'll often get a full penny per point when picking them.
All credit card reward plans restrict how you can use your points.The typical point rewards program offers you only a few ways to spend your points. The most popular rewards are points you can spend for airline travel, gasoline, and major grocery and drug stores. The list of participating stores may change frequently.
How to Choose a Credit Card with Free Point Rewards
Which rewards credit cards will save you the most? Consider your shopping habits.
- Consider where you shop. Select a credit card that earns rewards at the stores and services you use most often, or one that offers savings on items you buy regularly. Airline and hotel discounts, for example, are not particularly useful if you don't travel frequently, because you won't earn many points.
- Do the math ahead of time. Based on your customary purchases, how much will your reward actually be? If you charge at least $3,000 to a credit card, a points reward card with a 1% cash rebate will earn $30 for the year. Remember, first and foremost, reward credit cards are worthwhile only if you pay off your balance each month.
- Rewards cards have a points threshhold, which is the number of points you need before you can redeem the points. Naturally, you benefit from a lower threshhold. On some cards, your points expire if the account is not active. On other cards, the points expire after a fixed period of time. Stay aware of expiration dates and redeem any points before they disappear. The redemption rate for airline miles is always changing, so it makes sense to use your reward points as soon as possible. Over time, it takes more points to purchase products or air mileage. So the points or miles you earn become less valuable the longer you hold them.
- The rewards are often higher for certain categories of purchases. But those categories change often, so you have to pay attention. Some cash-back rewards can only be spent in the store that issued the card.
- It takes time and energy to manage the points plan. Rethink your decision if the terms of the cards are too complicated and you're not going to figure out how to use those rewards.
Debit Cards with Free Rewards
When you use a debit card, you authorize the bank to withdraw the cost of the purchase directly and immediately from your bank account. The use of debit cards is growing. Debit cards are popular with people who do not want to carry cash or checks with them. Reward debit cards are available, but the rewards are lower than those offered with credit cards. You have to spend more on a debit card to earn the same reward.
Airline Miles Programs with Free Rewards Credit Cards
On some reward cards, you can accumulate airline miles. With a typical reward program, cardholders earn 1.25 airline miles for each dollar spent on any purchases. On the best plans, miles are redeemable for flights on any airline with no blackout dates and no seat restrictions. Look for a plan where the miles should never expire, and one that has no limit on how many miles you can earn. It should be easy to redeem miles.
When a Rewards Credit Card Is Not for You
If you are one of those people who don't pay off your balance every month, transfer your balance to a credit card with a low interest rate. Then use a different rewards credit card for your shopping, and pay off the balance every month. Reward programs often charge higher interest rates on your unpaid balance.
The Fine Print on a Rewards Credit Card
You can get a better rewards credit card if you have a good credit rating. The best rewards programs are offered to people with excellent credit. If your credit is very poor, It could be difficult to be approved for a rewards credit card. Card Issuers are trying to reduce their risk after being hurt by so many bad loans in recent years
Check the fine print of the rules that apply to your card or to one you're interested in getting. Many rewards programs have a limit to the points or cash you can earn each month. The limit can be as low as $5 a month. Some reward points expire if they are not used within the required time period. The best plans have no expiration date for your points.
If you are late with your credit card payment, some rewards programs are suspended or discontinued.
How to Save Money Without a Rewards Credit Card
Besides a rewards credit card, there are other options for saving money on your purchase. Many stores offer a customer appreciation account, or a cash-back rewards even if you pay cash. These programs apply rewards to purchases made only from the store. If you shop regularly at a store, ask about these money-saving customer perks.
Wherever you shop, ask if the store will offer you a discount for cash payment. Small stores pay merchant fees of 3% or more when the customer uses a credit card, so they are able to offer you a discount for cash.
Maybe a Rewards Credit Card Is Not for You
Rewards programs with confusing rules and restrictions are more trouble than they're worth.
As banks tighten up in the face of financial problems, credit card rewards programs are not as lucrative as they used to be. The cost for merchandise offered through rewards programs is often higher than it would be at retail.
Some banks have reduced the value of your points, so that you get less when you redeem them. Banks are also raising the limit threshold required before they will redeem your points.
If you carry a monthly balance, even for short periods of time, rewards perks are secondary to rates and fees. Choose your credit card on the basis of the interest rate and fees that can be charged.
Banks retain the right to amend and modify your rewards program at their discretion. Pay attention to any information sent by the bank that issued your card to make sure the rules for redemptions haven't changed. In some cases, it may make sense to redeem points as soon as possible instead of accumulating points for a big ticket item.
Rewards credit cards do entice people to buy more and to spend more. Dun & Bradstreet says that consumers spend 12-18% more when using credit cards than when using cash. If you use the rewards credit card as an excuse to buy more, the card can become a liability. Some shoppers think, "It's OK if I buy the TV because I'm getting 2 percent cash back", and they overspend.
Where Can You Get a Free Rewards Credit Card?
Every company that offers credit cards also offers rewards credit cards. The top 10 issuers of credit cards are
1. American Express 2. J.P. Morgan Chase 3. Bank of America 4. Citigroup 5. Capital One 6. Discover 7. U.S. Bancorp 8. HSBC 9. Wells Fargo 10. USAA Savings
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