How to Choose a Rewards Credit Card That's Right for You

Credit cards can have many uses to different consumers. For some, it is a convenient way to keep their finances organized: spend money on the credit card all month, then pay one bill at the end. Others use credit cards to spend money that they don't currently have so that they can pay off the bill later when they have the money to pay it. Still others use credit cards for the sole purpose of building credit, to help them get lower APR when buying a car or getting a mortgage on a house. For many users, according to Chanelle Bessette's L.A. Times article, it's the rewards and extra bonuses that interest people in various credit cards.

If used properly, rewards credit cards can help users to get cash back, airline miles, and other perks. However, as with anything, there are both pros and cons. The best rewards cards give thousands of points as a signing bonus for charging a certain amount of money in a designated amount of time. Then, they offer points (or miles or cash back) for every dollar charged to the card in the future. Users can often get a flat amount of cash back on every purchase or can get special rates like 5% cash back on gasoline purchases. Some cards offer miles on airlines, which can essentially let you fly almost anywhere in the world as a reward for spending on the credit card.

On the downside, many of the best rewards cards have annual fees. The better your benefits from a rewards card, the more likely it is that the annual fees are high. For some cards, the annual fees can be hundreds of dollars, so they are more beneficial for people who will use them a lot in the year, gaining as many rewards as possible. Also be aware that some rewards cards extra fees when used overseas, or may not even be accepted by overseas vendors.

So, when deciding if a rewards card is right for you, there are several factors. Do you have great credit? Better cards require higher credit scores.  Do you often carry a balance on your credit card? Rewards cards tend to have higher APR, so the interest you pay could outweigh the rewards. If you travel a lot, a rewards card that offers mileage could be a good choice. If you spend a lot of money in certain categories each month, like gasoline or groceries, you can choose the right rewards card for you to maximize your benefits. All in all, there is no right or wrong answer. Rewards cards should be obtained only after careful consideration, on a case-by-case basis.

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