CREDIT CARDS

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Are credit card rewards rewarding?

Let's face it, who doesn't love rewards? It seems the more you charge on your credit card the more rewards you are eligible for but this alone is not a good enough reason to throw caution to the wind and become spend thrift. If you are smart about your spending you can cash in on some nice credit card rewards.

For many card holders, the idea of getting something in return for paying with plastic is very attractive. In some cases, you could be entitled to up to $1500 worth of goods or services simply by using your rewards card to shop throughout the year.

While there is no such thing as the best credit card rewards scheme, most shoppers will find a suitable card for their spending habits and personal circumstances.

Best credit card rewards for you

For instance, if you use your credit card for regular purchases, such as at the supermarket or petrol station, and then pay off your balance each month you won't be as concerned about a card's interest rate. Instead you may be more interested in finding a credit card that rewards frequent use.

Whereas if you're the type of person who struggles to repay your monthly bill, you might be better suited to a low-rate card rather than one which offers rewards points.

That's because rewards cards often have above-average interest rates and fees.

What can you do with reward points?

Card holders can use accrued points to redeem a range of items from flights and accommodation, to vouchers and merchandise such as appliances, perfume and sporting equipment for instance.  

A number of co-branded credit cards exist too – these are rewards cards branded with a store or company's logo. For instance, airlines and major department stores offer credit cards with rewards points, which can be converted directly into air miles or shopping vouchers.

There are other advantages of rewards cards. Some of the best credit card rewards offer up to 12 months additional warranty on selected products. You can also receive free travel insurance if you use your credit card to pay for the flight.

The downside to rewards cards

While rewards cards have their benefits, they also have their catches. As mentioned above, even the best credit card rewards schemes can have above average fees and rates.

Also, rewards cards encourage you to spend! In order to be eligible for the maximum rewards, card holders may need to spend as much as $60,000 per year!! In fact you may need to spend thousands of dollars to redeem a return Sydney-to-Melbourne economy flight.

In which case, most consumers might be better suited to a credit card with a low interest rate.

There are so many reward credit cards and low interest cards in the Australian market so you will not have trouble finding one that suits you. Roll up your sleeves and start researching now by using the RateCity credit card comparison tool.

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