Credit Cards

Credit Card Reward Types

Credit cards offer a large range of rewards that are often customized to each individual card, but they can all be grouped into one of four major reward categories that are explained in detail below: Cash Back, Pseudo Cash, Airline Miles, and Points. Choosing the type of reward that works for you can be confusing, but in the end it all comes back to the rate of return you will get on your credit card spending from the reward. When rate of returns are equal, you should always choose the card with the most flexible reward type, which is cash. Unfortunately, those cards that do offer cash back rarely offer anywhere near the rate of return that is obtainable using points, miles, or some other card-specific rewards programs.

Cash Back

This is the most basic and most desirable type of reward available, cash is king after all! With cash back credit cards, the credit card company agrees to refund a small percentage of your purchases back to you every so often either by a credit to your account or in the form of a cheque. There are several important things to consider for cash back credit cards such as percentage of cash back, payment schedule, tier systems, annual fees, and annual rewards cap. Keep reading » about Credit Card Reward Types

Saving Money Using Credit Cards

Credit cards are fast becoming the most common form of payment in North America and around the world. This is unfortunate for business owners who have to pay up to a 3% merchant fee on everything they sell via credit card, but at the same time it is becoming more lucrative for savvy consumers as creditors begin to share their profits with consumers to entice them to use their cards. This profit sharing comes in the form of non-taxable rewards that include points, air miles, cash back, travel insurance, extended warranties, and many other potential benefits. Unfortunately, all of this overhead inevitably translates into higher shelf prices for products to make up for the money lost to credit card companies in merchant fees. However, if you aren’t one of the people leveraging credit card rewards, or at least demanding a cash purchase price discount when shopping, then you are a victim of higher pricing without any rewards kickback.

Therefore, it might seem foolish not to sign up for a good credit card, right? Actually, that’s not always true. Credit cards are a very dangerous form of payment that can easily find the average consumer in mountains of debt by spending money that they never had. Once that happens, you are stuck paying ridiculous interest fees as high as 30% annually and you end up in an ever deepening hole that you can never get out of. Many personal finance advisors actually recommend that you never sign up for a credit card and pay for things using strictly cash. In some cases they will even advise against the use of debit cards because, similar to credit cards, they make money too easy to spend. Keep reading » about Saving Money Using Credit Cards