Is a rewards credit card right for you?


Whilst balance transfer and purchase credit cards have long been the most popular in the UK, increasing numbers of consumers are turning to rewards cards. Earning points to exchange for cash and other items is simple and rewarding -- as long as you don't overspend. Here are three reasons to consider a rewards scheme when looking for the best credit card for your needs.


1. It is easy to earn points
One of the main advantages of a rewards credit card is that you can accumulate points and rewards simply by using your credit card for transactions you would be making anyway. Every time you visit the petrol pump, purchase your weekly groceries or buy clothes for your children, you could be earning rewards.

A rewards credit card is often the best credit card to choose if you pay off your balance in full every month. Why not earn rewards for money you'd be spending anyway?

However, be careful. Studies show that rewards cards tend to encourage overspending, so take care when using your card. Rewards cards often feature higher interest rates as well, so be sure to pay off your balance at the end of the month.  

2. There are some great rewards on offer
Once you have built up points through using your rewards credit card frequently, you can then choose from a wide range of rewards. These include cash back, Air Miles and vouchers. Or, alternatively, you can pick from a wide range of rewards from a dedicated catalogue.

3. You can also benefit from the best credit card deal
A rewards credit card does not necessarily just offer points for every pound that you spend. Many credit cards also feature excellent rates on balance transfers and purchases.

When shopping for the best credit card, make sure you look at both the interest rates and the rewards. Also, bear in mind that you will rarely receive credit card rewards for transferring a balance. And, if a balance transfer takes you near your credit limit, you won't be able to use the rewards credit card to generate points through purchases.

See related: 5 questions you should ask before signing up with a new credit card provider; 3 secrets to getting a better deal on your next credit card

Published: 18 March 2011