Making the most of your rewards based credit card

There are many different types of credit cards available on the market in the UK today, with cards to suit all needs and circumstances, from those with good credit to those with bad, and from those that like to clear their balance in full each month to those that prefer to spread the repayments on their credit cards. Amongst the credit cards on offer from the wide range of credit card providers in operation today are 0% balance transfer credit cards, 0% purchase credit cards, low rate life of balance transfer credit cards, charity credit cards, adverse credit credit cards, and rewards based credit cards.

Rewards based credit cards have become very popular over recent years, enabling many consumers to not only enjoy the ease, convenience, and flexibility of credit card spending, but also enabling them to enjoy earning rewards simply for using their credit card in the usual way. However, there are some important things to remember if you wish to make the most of your rewards based credit card, as these cards do not suit everyone, and some people may find themselves worse off with a rewards based credit card than with another type of credit card.

Who can benefit from a rewards based credit card?

Those that will benefit from this type of credit card are cardholders that:

• Use their credit cards regularly for both day to day and one off purchases
• Those that do not conduct cash transactions or make withdrawals on their credit cards
• Those that repay their balance in full each month

This is because the more you use your card the more you will earn in terms of rewards, so those that use their card regularly will be able to enjoy maximum rewards. Also, rewards are not awarded for cash transactions and withdrawals, only on purchases made directly on the card. This is why it is important to resist making cash transactions, as you will not earn rewards and will actually incur fees instead. Finally, if you do not repay your balance in full each month you are likely to be hit with high interest charges, and this can counteract any rewards based benefits, so it is important that you are the type of cardholder that clears their balance in full each month so that interest is not charged.

Who should not opt for a rewards based credit card?

Cardholders that will not really benefit from this type of card include:

• Those that rarely use a credit card
• Those that spread their repayments rather than paying off the balance in full each month
• Those that use their cards more for cash transactions and withdrawals rather than to make purchases

This is because the level of rewards received can be low, and it can take time to build up these rewards. If you rarely use your card then you will most likely never really build up substantial rewards, which is a waste of time for you. If you tend to spread repayments on your credit card you will have to pay interest on your spending, and therefore a rewards based credit card may prove useless, as your interest charges will far outweigh any rewards that you earn. Instead, you may want to look at taking out a 0% purchase credit card, where you can enjoy longer periods of interest free credit. Finally, if you tend to use your card to make cash withdrawals and transactions (which can prove costly and therefore should be avoided) you may not benefit from this type of card, as rewards are not accrued through this type of transaction.

Types of rewards based credit cards

There are a number of rewards based credit cards to select from for those that are suited to this type of card. This includes cash back credit cards, where you can earn specified levels of cash back for every pounds spent on the card; retail rewards credit cards, where you can earn points towards discounts at various specified retailers; travel rewards credit cards, where you can enjoy a variety of travel offers and discounts such as money off hotels; and air miles credit cards, where you can clock up air miles through your spending and can use them to get free flights.

As with any other type of credit card you should make sure that you shop around and compare rewards based credit cards to get the best deal possible. You should remember that the number of reward points or air miles, or the level of cash back, awarded per pounds spent on the card can vary from one card provider to another, and therefore you could see a big difference to the level of rewards you earn based on the credit card you select.