Free cash and rewards like airline miles and merchandise discounts… sounds pretty good to me! But is there a catch?
Many credit card companies now offer a rewards program to entice you to use their credit cards — like cash back! It seems easy to take advantage of these benefits. But be careful, behind all the glittering lights some of these cards may come with higher interest rates, annual fees and other “hidden” costs. Compare these programs to the cards you already carry. I know mine has no annual fee, a low non-variable rate, and free balance transfers with many other benefits which outweigh the freebies offered by other companies. Here are a couple ideas to help you take charge of the plastic you carry:
- Research — Be sure to get all the facts. Know the facts about the plastic in your wallet. Does your current credit card have low rates, no annual fees, etc? If so, these benefits may be of greater use to your bottom line than the rewards. Be cautious when applying for credit. Having your credit checked by multiple sources will not only lower your credit score but can also be a red flag for companies as possible fraud.
- Compare — Get all the details. Which one would be the best fit for your needs? Many financial institutions may not offer the cash back rewards on their cards, but they may offer additional benefits for their cardholders. For example, you may get a rewards program but if you want to transfer a balance you could be charged a service fee, there may not be a payment grace period, or “payment holidays” where you get a payment free month by meeting certain criteria.
- Caution! — Don’t go on a shopping spree and charge up your credit card simply to earn rewards, or to take advantage of lower introductory rates. Make sure the credit card purchases are within your budget. While the pretties may be fun, you can crash from that shopping high when the bill comes in the mail.
Before you say “Charge It!” be pro-active. A savvy shopper is always well informed.
Learn more about our credit card offers and how to design your own card at https://www.ftwccu.org/site/loans_credit.html.