Many of us don't really think about what type of credit card to get when we're looking for a new one. We just accept the first application to hit our mailbox, offer in our online banking dashboard, or store clerk approaching us. If you want to be smart about getting your next credit card, it's a good idea to know what you're looking for.
It almost always makes sense to go for a credit card that gives you some kind of reward for being a loyal customer. Unless you're paying more money for this credit card, even if you get a small reward in return, it's better than getting no reward at all. Here are the top four types of reward credit cards.
1. Point rewards.
With a credit card that gives you reward points, you usually have flexible options when it comes to redeeming those points. These credit cards may give you a fixed point amount or a flexible point amount (a point per dollar spent, for instance). Though the point values needed in order to redeem anything are often very high, so you pay thousands of dollars before you get a 0 gift card, these cards are one of the easiest types of reward credit cards to manage.
2. Cash back rewards.
If you're spending a lot of money on your credit card, a cash back program can feel like getting an extra Christmas bonus at least once per year! These credit cards offer a percentage, such as a 1% cash back card. This means that for every 0 you spend, you'd get back. If you spend ,000 on your credit card, you'd get back. This can sometimes be a better deal than points, depending on how much money you spend on your credit card.
3. Air miles.
Do you travel a lot? Would you like to? If you spend a fair amount of money on your credit card, there's no reason you shouldn't get miles in order to travel, too. These cards often award a particular mileage amount for every eligible dollar spent. There are sometimes catches, so make sure you look up how easy or difficult other people have found it to redeem their miles. Hotel credit cards work similarly by giving you free hotel stays.
4. Store credit.
If you shop at one store chain frequently, there are loyalty cards that give you store credit to be spent at any location. These credit cards are sometimes limiting because you can't spend the money or points anywhere, but if you tend to be loyal to that particular brand, you'll usually get a better spending-to-rewards ratio than you would through the other types of reward cards. Make sure you choose a card for a store you genuinely love and shop at frequently, not one you'd like to buy from, or your points may go unused.
There are other, more specific types of reward credit cards, but most cards fall into one of these categories. When you're deciding which one to choose, take into account whether you shop at any particular stores or would like to travel and don't mind the hassle of redeeming miles. If these two card types don't sound appealing, compare cash back cards to points cards.
Whichever card offers you a better ratio of money spent to rewards gained with a lower interest fee or