How to Choose a Rewards Card

If you're in the market for a new credit card, you might have been intrigued by the promise of rewards cards. These are credit cards that give you discounts, points, and even cash rebates when you make certain types of purchases. Some people swear by them, but many are confused by the sheer number of cards and their rules for redeeming rewards. To help clear up the mystery, here are a few things to consider when you're choosing a rewards card.

What Does it Reward?

This is perhaps the most important question to ask. Rewards vary wildly, from the mundane to the outlandish. You don't need discounted helicopter tours of Napa Valley if you never plan to visit California. On the other hand, a rewards card that helps offset the cost of veterinary bills can be a big boon to pet owners. Likewise, almost everyone can benefit from rewards cards that give you points for buying gas and groceries.

If you have kids who will someday go to college, you can find rewards cards that donate a percentage of your purchases into an educational fund. Perhaps you have a charity that you'd like to support. Some rewards cards take a portion of your purchases and donate the money to support good causes.

Terms and Conditions

These vary from card to card, so be familiar with the terms and conditions before you enter into an agreement. Rewards cards give you points for your purchases, but those points might seem stingy or be difficult to redeem. Look for cards with generous limits on the number of points you can accumulate. Also choose cards that let you redeem your points frequently. Of course, if you'd rather receive an annual lump-sum payment, there are cards that do that, too. And if a rewards card has strict expiration dates for your points, look elsewhere. You don't want to spend your money to earn points, just to be told that they've expired.

Other Considerations

Do you charge a lot? Some rewards cards give you better rewards once you've charged more than a designated amount of purchases (usually $1,000 to $6,500). If you use your credit cards often enough to pass this benchmark, you can take advantage of generous reward incentives.

If you carry a revolving balance on your cards, look for a low APR credit card. Reward points don't mean much if you're paying exorbitant interest rates for the privilege of earning them.

Click here for a detailed list of reward cards.