Low Interest Credit Cards

There was a time when rewards credit cards meant earning points for Caribbean cruises and getting cash back in bulk, but issuers have pulled back on rewards programs and now it takes thoughtful consideration to decide whether rewards cards are really worth it.

What makes a rewards card worthwhile? Depending on what type of rewards you want to earn—airline miles, cash back, spending points, travel packages—the bottom line is you’ll benefit from earning rewards without extra cost to you. Here are golden rules for getting the most out of your rewards card without it busting your wallet or credit score:

1. A smart way to use a rewards card is to pay for daily expenses, such as gas, groceries, and bills. You’ll rack up rewards for your usual, everyday spending that you can pay off rather than big ticket items that earn you points but stick you with a big bill at the end of the month.
2. Always pay your monthly bill in full. Interest rates on rewards cards are notoriously high; carrying a monthly balance will rack up interest charges and negate any rewards you earn.
3. Make sure your rewards card fits your spending style and gives you a high rate of return. Don’t settle for 1% cash back rate if you can find 2%, and don’t give in to an airline rewards card if you don’t charge much on your card a month and will take years to rack up any substantial mileage.
4. Understand the card’s policy and rules of the rewards program, such as where you can redeem points and possible expiration dates or black-out dates so you know your cards limits and judge whether it gives the kind of rewards you want.
5. Look for a rewards card with no annual fee. Its most cost-efficient to earn bonus rewards at no additional expense. However for high spenders, an annual fee can just justified if the spending is high enough and the rewards return rate generous enough to make paying an annual fee worthwhile to earn big rewards.
6. Set up automatic payments. Some issuers will wipe out your rewards earned during a billing cycle for a single late payment. Automatic payments ensure you hold on to your rewards points.

The advantages of rewards cards have taken a beating lately as issuers make it more difficult to cash in on rewards. As you shop around, look out for some rewards card obstacles:

1. Issuers are penalizing cardholders by cutting back on rewards and cash back points, wiping out any rewards earned, or shutting down rewards programs all together for the smallest infringement like one late payment or inactivity. Manage your card wisely to avoid losing your rewards.
2. Read the fine print and be aware of all fees and penalties, and details like the grace period, APR, and due date for billing cycles. If you already have a rewards credit card, check to see if there have been any changes to the terms and conditions of your card.
3. Watch out for expiration dates and restrictions on rewards.

The key to winning the rewards card game is finding a card that works for your financial life and habits at the lowest cost and little maintenance as possible. If a rewards credit card doesn’t fit your needs or is out of your credit score range, you might be better off with a simple low interest rate credit card that may not get you to Maui but will help you manage and better your credit.

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