How to choose the best rewards card for you

By Jim Bemboom
Card services manager at Dupaco Community Credit Union

Who doesn’t like to be rewarded?

Rewards credit cards “reward” you with some type of bonus or extra perk when you use them.

With Dupaco’s Rewards Visa credit card, for instance, cardholders earn points with every purchase, and the points can be redeemed for a variety of options, including merchandise, concert or airline tickets, hotel stays, cash back and more.

MORE: Learn more about Dupaco’s Rewards Visa credit card.

Know the potential drawbacks

But rewards credit cards aren’t for everyone. There are a few potential drawbacks to consider:

• Higher interest: Annual Percentage Rates can be higher on rewards credit cards compared to their traditional counterparts.
• Annual fees: These cards also can carry a larger annual fee.
• Limited redemption options: Redemptions might be limited to certain things or certain times of the year.
• Point expiration: Points might expire sooner than you would expect.

What factors you should weigh

If you’re interested in carrying a rewards card, it’s good to do your homework first. Not all rewards credit cards are created equal.

Here are some features to consider when determining which rewards card is right for you:

• Annual Percentage Rate: Expect a rewards credit card to come with a higher APR than a traditional one, because you are being rewarded. Find out what the APR is, and determine what your goal ultimately is with any debt you might have. If you’re trying to pay down debt, opening a credit card with a higher APR—even with rewards—might not be in your best interest (no pun intended).

MORE: Learn how you can reduce your household’s debt load.

• Annual fee: Some rewards credit cards come with annual fees that could cost you hundreds of dollars each year. You shouldn’t have to pay that much to be rewarded. Dupaco’s Rewards Visa, for instance, has no annual fee.
• Usage: Some rewards credit cards can only be used for certain types of purchases or at specific stores, such as airline tickets or gas stations. If you don’t make frequent purchases at those kinds of businesses, that rewards credit card might not be a good fit for you.
• Redemption options: Likewise, some rewards credit cards only allow redemptions on certain things, such as airline tickets. If you don’t fly a lot, consider a card that rewards you for the things you use.
• Carrying a balance: If you carry a balance, or plan to do so, from month to month, make sure your rewards outweigh what you would pay in interest each year.

How to get the most out of your rewards card

Once you have your card in hand, you’ll want to take full advantage of its perks. Here are some ways to get the most out of your card—without busting your budget:

• Use it as frequently as possible: If the card isn’t store or purchase specific, consider using it more often to pay for your purchases. Some people will use their rewards credit card for all of their expenses, such as gas, utilities and cell phone bills, and pay it off each month rather than writing checks or using a debit card. This still requires budgeting on their part to make sure they can afford their charges.
• Stay within your means: Again, make sure that any charge you make is part of your budget. Spending more than you can afford—just to earn rewards—isn’t worth it.
• Pay your balance in full: Pay your balance in full, or as close as you can, each month before interest is charged. Dupaco members who carry a small balance from month to month can still benefit from Dupaco’s Rewards Visa. Everyone’s financial situation is unique, and Dupaco employees can help you decide which Dupaco Visa is the right option for you.
• Use those points: Don’t let your points expire before you have a chance to accumulate enough to use them. There’s nothing worse than working to save points to use for something special, only to find out that they expired before you could do anything with them!