One Size Does Not Fit All: A Quick Checklist if A Credit Card Reward Scheme is For You

May 18th, 2010

Credit card rewards programs can be very tempting, especially with the wide range of items customers can redeem points for. Unfortunately, not all customers will benefit from card rewards the same way. In fact, some might be disadvantaged if they choose the wrong program for them.

Checklist to Tell If a Credit Card Rewards Program is Right for You

The idea of earning enough credit card rewards points to redeem for flights or a new iPod or even a $100 gift card for shopping can be very tempting. Unfortunately these types of credit card rewards programs aren’t suited to everyone.

Here is a quick checklist to help you determine whether a credit card rewards program is right for you:

Frequent Credit Card Use

If you’re the type of customer who frequently uses a credit card to pay for purchases, then you could benefit from accumulating card rewards. As the majority of these programs reward card holders based on the amount spent, you could find it easy to save up enough points quickly to be redeemed for great items.

For those customers who only use a credit card rarely, or for emergencies, it may be better to aim at a card with a low annual fee and a lower interest rate rather than a rewards card.

Pay Off Entire Balance Each Month

Customers who are disciplined enough to pay for their bills and purchases each month using a credit card and they repay the entire balance before the statement due date can really benefit from card rewards.

Many credit card providers offer cardholders the benefit of up to 55 days interest free on purchases, so there won’t be any high interest charges to worry about, but you’ll be accumulating points quickly.

Unfortunately, if you tend to carry a balance from month to month, then the interest charges you pay might make having a rewards card more expensive than the rewards you’re earning.

Saving For Special Rewards

If you’re happy to continue saving your reward points to be redeemed for a larger item, such as an international flight or larger electronic items, then you might look for ways to boost the rate at which you earn rewards.

However, if you feel you don’t need the rewards being offered, then there’s really not much point in paying an annual fee for a credit card rewards program.

Editors Choice: Featured Credit Card Deals

	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
Westpac 55 Day Credit Card	0% for 5 months (reverts to 19.59% )	3.99% for 6 months	$0	21.49%
Citibank Clear Platinum Card	11.99%	2.9% for 12 months	$99	21.74%