Reward Credit Cards: How to Choose the Right One for You

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Reward credit cards are popular. Consumer surveys continue to point to rewards as the primary factor in choosing a credit card. When you use a reward credit card for everyday purchases, it’s possible to make every dollar count.

Credit card issuers allow you to benefit from loyal credit card use. While the amount earned for each transaction varies, the ability to earn points while spending can add up to huge savings. Redeem earned points for gift cards, travel discounts, merchandise, statement credit, or cash back rebates.

But with hundreds of competing card offers, it’s difficult to know which card to choose. Before applying for a credit card, answer these questions to determine if the offer is a good fit for you.

What are the reward limitations?

Most reward programs have earning limitations, often called reward rates, which can vary widely. The rate is the amount earned for every purchase made with your credit card and is usually broken down by spending category, e.g., groceries, travel, restaurants, etc. Some credit cards, like Generations Rewards Visa® Card, allow you to earn 1.5x rewards points on every $1 spent with no earning limits. Other credit cards may claim that you’ll earn 2% cash back, but only at grocery stores, while at the same time limiting your rewards to the first $2,500 in quarterly purchases.

Will I use these rewards?

Airline and hotel branded travel rewards credit cards are especially attractive to frequent travelers. Besides earning points or miles for regular purchases, cardholders can earn bonus points and receive exclusive perks for using the card to pay for branded airline tickets or hotel stays. However, if you stay close to home most of the year, a travel rewards credit card is not the best option for you. Select a card that offers the type of rewards you can use.

Do the rewards outweigh the costs?

A quick cost-benefit analysis can reveal whether the costs of owning the card eat away at the expected benefits. At a minimum, compare the annual percentage rate (APR) that applies when you carry a balance each month and the annual fee to the maximum allowable cash back.

For example, you might consider a credit card that offers 1.5% cash back on purchases up to $3,000 annually. In this hypothetical example, the maximum reward would be $45. If you intend to carry a balance each month on this card, you must factor in the 24.9% APR and $100 annual fee, which will wind up costing you more than the potential savings.

Do the rewards expire?

Most credit card rewards have an expiration date. Each credit card issuer has its own policy regarding points or mile redemption. Expect to be required to redeem points at least once every 18 months to avoid expiration. Inactive credit card use can also influence your ability to redeem your rewards. Credit card companies are not required to notify you that your rewards are set to expire. Stay on top of your required redemption periods to avoid losing your earned rewards.

Selecting the right rewards credit card requires a careful look at your money goals and spending habits. When you know your financial priorities, the selection process is less complicated. Get rewarded for your purchases with a Generations Rewards Card. Start earning today with no annual fee*. Apply now!


*For a complete list of transaction fees, penalty fees and APRs, view our Application and Solicitation Disclosure.

Written by Freelance Personal Finance Writer, Tracy Scott