Repair Your Credit Profile

When credit cards offer “rewards” to their cardholders, it is done in connection with the number of purchases the customer makes with the card.The variety of rewards offered by credit card companies is virtually endless, with some of the popular rewards being air miles or discounts off of the cost of certain airline’s flights.Many stores and retailers also offer “loyalty” rewards if you are using a credit card issued in their name and some credit cards will give the opportunity to earn discounts on the purchase of a new car.  

However desirable some of the rewards offered by some credit cards might be, the question that must be asked is whether or not these rewards are worth it.In an effort to answer this question it is helpful to compare the rate of interest charged on purchases made with cards that offer rewards with those that do not have rewards.There is a great number of rewards credit cards that offer some sort of reward or loyalty bonus, but the lowest rate of interest on these cards is likely to be in the area of 15% APR.This interest rate is much more than the zero percent interest rate on the introductory offers of many other credit cards and about 7-8% more than the interest rate of a basic low-interest credit card.The interest rate on some of the reward cards can be as much as 30% APR, you will find this out if a comparison of the interest rates on the broad range of these cards is done.

If you are a regular credit card user who wants to earn sufficient points for worthwhile rewards and have to pay interest at these sort of rates, then it would certainly be worth giving serious consideration toward choosing a much lower-interest credit card which does not offer rewards.The kind of credit card user who pays off their total card balance before the payment due date and never has to pay interest, will actually receive the rewards for using their card for free.If you are not sure if you can maintain the discipline of paying off the total balance on your credit card each month, then an alternative worth considering is the cash-back credit card.The way the cash back credit card works, is to pay cash back to the card user in accordance to what is spent on the card each month and this is also the same basic working principal of the credit cards that offer rewards.      

The best cash-back rate is currently running at around 5% on spending that attracts almost 19% APR in interest, it is easy to see that you will still be paying quite dearly for the use of the card.The interest charges can be avoided and the 5% cash back can be put into your own pocket if you are one of the consumers who is in the habit of paying all of your outstanding balances each month.    

If you intend to maintain a strict personal practice of repaying your balances every month to avoid paying interest, it may be wise to use the credit cards that have cash back and rewards attached to some of them such as gas credit cards.Your personal financial picture may be given a brighter focus when you are using these cards that offer rewards and cash back.

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