Choosing and Using Credit Card Rewards

Monday, December 07 at 10:10 AM
Category: Personal Finance

Credit card rewards programs can provide you with appealing offers for things such as points to be used for travel and shopping or cash added to your account. But finding great deals is only half of the equation. Also make sure you don’t miss out on other more important account features.

Before jumping into any rewards program, consider these tips for maximizing the potential benefits and minimizing mistakes.

Comparison shop different rewards programs, including their fees and other costs, before deciding to apply for one. One credit card might offer seemingly terrific rewards but also charges fees that may negate the rewards. So it's important to take a look at other products (such as a rewards card without an annual fee) and weigh the costs and benefits of each one.

Consider an Arvest Credit Card with Arvest Flex Rewards when doing your search. Apply online.
Choose a rewards program that fits your lifestyle. The best way to maximize benefits and avoid spending problems is to choose a program that rewards you for purchases or deposits you would make even without the gifts.

"You may want to think about rewards programs in terms of reaching your goals, because each one has different features," said Susan Boenau, chief of the FDIC's Consumer Affairs Section. "For example, if you are planning a vacation, then a credit card offering a lot of points for airfare and hotel costs may appeal to you. But if the card also has a high interest rate and you plan to carry a balance, you may find another credit card offering a lower interest rate may be a better deal overall."

Remember what it takes to earn rewards. Many credit cards provide rewards when you use them to make purchases, but it's important to know exactly how much you can earn. For example, a card issuer may offer 5 percent cash back on groceries, but the fine print may say that reward is available only on the first $1,000 spent each year. Likewise, while some banks offer sign-up bonuses for simply obtaining a card, others may require you to charge a certain amount of money to the card within the first few months. In addition, some card issuers offer specials that double or triple rewards for purchases in certain categories. 

While rewards can be beneficial, don't spend just to earn rewards. A recent Federal Reserve Bank of Chicago report noted that overall spending and debt accumulation may increase slightly among consumers who use a rewards credit card. 

Check your account regularly to make sure you receive your rewards. A mistake or a coding error by a merchant may result in you failing to receive the full rewards amount you're due.

Be wary of signing up for too many rewards programs. Some consumers take on many rewards cards, either because they see a reward that is too enticing to pass by, or they're trying to build as many rewards as possible. However, using several cards may sometimes reduce your rewards. For example, if your purchases are spread out among multiple cards, it may be difficult to accumulate enough purchases on one card to acquire rewards. Be sure to look strategically at the cards you have before making a decision to apply for another one.

Understand how you may lose access to rewards. Consumers focus on the potential rewards they may earn but can forget that it is possible to earn rewards and lose them. Here are some examples involving credit cards:
  • If a cardholder misses a payment on a monthly credit card bill, some card issuers will take back the rewards earned during that month
  • Some card issuers place expiration dates on using rewards, which may be an unpleasant surprise if you plan to save rewards over a period of time
  • Card issuers may require customers to spend a minimum amount on the card to continue to earn rewards or keep the rewards they've already earned
Also be aware card issuers may reserve the right to change the terms of their rewards programs or cancel the programs at any time.

Manage your credit cards. Any rewards you receive can become worthless if you allow fees or other penalties to pile up. So, try to pay your credit card bill on time and in full each month to avoid interest charges and late fees. 

Information courtesy of FDIC Consumer News.

Article edited by Blog Admin 1/4/16.

Tags: Arvest Flex Rewards™, Credit Cards, Financial Education
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