How to know if you are prepared to open up a Rewards Credit Card

Mar 15, 2016 by

How to know if you are prepared to open up a Rewards Credit Card

Reward credit cards have been popular for some time now. But they have really gone off the charts over the course of the past few years. Nearly every credit card issuer boasts some kind of rewards program now. Some will offer you the chance to earn gift cards. Some will give you airline miles or credits at hotel chains. Some even offer to give you cold hard cash back for every dollar you spend on certain types of purchases. These are all great incentives. And a rewards credit card can certainly prove to be beneficial to many consumers. There really is nothing like earning perks back for doing something that you would be doing anyway – spending money!

Despite the perks, though, these types of cards are not right for all people. Many rewards cards charge higher interest rates when compared to similar cards with no rewards offers. Some cards even charge high annual fee charges that may prove to be more costly than any rewards that you actually earn. However, like we said, rewards cards can be, well, rewarding. It’s all about making sure that you are in the right place in your financial life prior to getting one. So how do you know if you are ready to upgrade to a rewards credit card? Here are some key signs that show you can move on from a basic credit card to the rewards card of your choice.

You Are Ready for a Rewards Card if:

You Have the Household Budget Well Under Control

It is a great thing to earn benefits while you charge your expenses. However, you should not sacrifice your budgeting efforts in an effort to earn more, more, more. In other words, don’t start spending on your card like crazy so you can simply earn more rewards. If you have the ability to create a household budget, stick to it and you manage to put a bit of money into your savings every month, there is a good chance that you might be a good candidate to get a rewards card and to use it responsibly.

You always pay off Credit Card Balances in Full

The rewards that you earn are only really good for you if you carry a zero balance on your card. That way, the miles or cash bonuses that you earn actually outweigh any interest that you accrue on your purchases. If you are one of those people who always makes it a point to only charge as much as you can reasonably afford to pay off in full every month, and you always pay off every dollar that you charge when your bill comes through, then you may find that a rewards card is a great tool to help you get a little cash back or to earn miles for your next vacation.

You Have a Good Credit Score

There are tons of rewards programs available these days. The best, however, are usually reserved for people with good credit scores. It is also worth noting that if you do have a high credit score, you are probably pretty responsible with your credit, which is another plus. Before you fill out any applications to get a rewards credit card, make sure that you pull your credit report/score to find out where you stand right now.

Finally, only get a rewards card that offers you perks you will actually use. If you don’t travel frequently or perhaps don’t enjoy flying, then a card that offers airline miles is probably not right for you. Spend a little time shopping around and comparing rewards credit cards to find the card that offers the types of rewards that you will enjoy racking up.

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