Reward Credit Cards – Spending has it’s Rewards

There are many benefits to reward credit cards – by far the greatest the financial reward aka cash back, travel miles, groceries, etc. These are the new norm and an obvious choice. There is a wealth of information online about how to optimize every last point and penny to travel around the world on a shoestring. If spending hours on analysis isn’t for you don’t despair. A lot of the benefit can be gained with minimal effort.

Free cards – don’t have a fee to use them and typically give you a lower rate of rewards. These are a great entry into credit cards. All the major banks have them so head in today. Look for a reward rate of at least 1% aka if you spend $100 you get $1 worth of rewards.

Premium cards – these have an annual fee, balanced by more rewards. They usually have all the additional benefits like travel insurance, concierges, and special events. Depending on how much you spend a year the benefits may be greater than the annual fee. The reward rate should be around 2% aka if you spend $100 you get $2 worth of rewards.

Get free money now
1. Calculate if you spend enough to make a paid credit card worthwhile (use the simple calculation of annual fee/ reward rate = required spend)
2. Apply now
3. Use this credit card for all your purchases. But remember pay off your balance – the interest rates eclipse the reward rates.

Still not convinced?
Now that credit card rewards are expected it is worked into the cost of most cards. This means you are leaving money on the table without one. Getting a reward card let’s you dip into what companies are expecting you to use. And it’s easy – making this one time switch results in rewards every time you spend.

If you can’t decide between a fee card and free card there is some simple math:
Annual spend * reward rate > annual fee to make the credit card worthwhile. A credit card with an annual fee of $99 a year and a %2 reward would only be worth it if you spend more than $4,950 a year on your credit card.

Links
Top rated reward cards

A couple examples of the depth of research done credit card rewards
Rewards Canada

An excellent example of what you can do with your rewards Chris Gillaboe’s travel site

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