Cashback and rewards

Understanding Credit Card Rewards

It’s the holiday season – a time for gift giving and entertaining. It’s also a time in which many of us tend to spend more. Why not get a little back in return by using a credit card with a rewards program. If you enroll in the right program, you could have access to the extra funds you need to make holiday spending a little easier while also earning benefits.

Before you start spending, however, be sure you understand the details of your credit card rewards program. Here are a few guidelines to help so you can get that most benefit from your spending.

Sign up bonus

Many cards offer a sign-up bonus to get you started. Bonuses range from points, to cash back, to a low or 0% interest rate. Make sure the sign up bonus works in your favor, and helps you meet your goals sooner. Also, check to see if there is an introductory offer such as earning extra points when you use your card within the first 90 days. Be sure you understand the sign up offer and assess if it’s realistic for you. A good rewards program doesn’t pressure you to spend outside your means.

Annual fee

If your rewards program charges an annual fee to participate, you’ll want to determine if that cost outweighs the benefits. If you aren’t redeeming rewards each year that at least add up to or exceed that annual fee, it’s probably not the right program for you.

Interest rate

Beware…many credit cards with rewards programs charge a higher-than-usual interest rate. Know what the interest rate is on your rewards card.

Expiration of points

Do your points or rewards have an expiration date? If so, you could be missing out on rewards. Check on the expiration time frame so you can cash in your rewards in time. Choose a program in which the rewards don’t expire too quickly, so you can save up for a larger purchase.
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Limitations

Some credit card programs have limits that are unrealistic. Others offer cash back only on certain types of transactions (such as gasoline or groceries). Be cautious of programs that only allow you to earn points after you’ve reached a certain amount of spending. At that point, you may have spent more than you can handle, in which case you will have to spread out your payments over several months. If there is a higher interest rate on those payments, you might end up spending more than you earned in points.

Also, watch for reward caps or limits on how many points you can earn in a given timeframe.

Do the math

These are just a few things to think about when choosing a rewards program. Read the fine print, talk to your representative and do the math to be sure the program you select works for your lifestyle and your budget.

Check out the 1st United Visa Rewards program – it’s simple, easy-to-understand, and might just be what you need.

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