Category: Credit Cards

By David

Today, many use credit cards for most of their daily transactions, a testament to the advanced technological age we live in. Credit cards offer a greater amount of safety and flexibility, making it more popular that carrying cash around. Besides being a lot more convenient than paper currency, many credit cards also offer attractive benefits and rewards.

Click here to compare and select credit card benefits and rewards

What are card benefits and rewards?

As a credit holder, you are typically awarded certain card benefits and rewards. The way it works: Banks offer reward points for each transaction you make, and these points can be redeemed for attractive gifts and privileges when they reach a certain point. In order words, you earn points for regular activities like paying for gas, shopping, utility bills, etc. And these points earn you rewards, thus making your expenses earn for you.

Also, many credit cards offer special benefits like cash back. That’s right; they’ll give you cash for spending your money. For example, if you make a purchase at store and pay using your credit card, you get a percent of the transaction back in cash (typically around 1 to 3 percent).

Here are some of the common card benefits and rewards offered by various banks and financial institutions:

• Reward points
• Free insurance for car rentals
• Cash-back offers
• Free airline tickets (frequent flyer miles)
• Complimentary movie tickets

How quickly can you earn points?

The rewards offered by credit card companies depend on the type of card you are using, and the frequency and size of your transactions. Typically, the higher the amount of the transaction, the higher the reward will be.

How do you choose the right reward program?

You should choose card benefits and rewards based on your spending patterns and needs. Before selecting a particular credit card, you can compare rewards offered by multiple banks and financial institutions. For example: If you are a frequent flyer, you should choose a card that rewards you with air travel miles. This will help you earn more reward points on your air-ticket expenses and it might even earn you a free vacation down the road.

How do you redeem your accumulated rewards?

Redeeming accumulated reward points is easy. Some reward programs allow you to use the accumulated points in lieu of cash, while others earn you specific items like kitchen appliances, stationery, toys, etc.

It is nice to get rewards every time you spend, especially if you have a card which rewards you for your normal spending habits. Just make sure you don’t start swiping just to earn points, as that can lead to financial problems down the road. Spend wisely, manage your finances properly, and you might just end up making money off the credit card companies instead of the other way around.

Given the different card rewards and benefits offered by most credit card companies, every bit of plastic you own should offer you a few extras.

By Matt

Are you making money on every purchase you make? If you’re not then you might be losing out.  Money back cards, credit and debit, are widely available from almost all financial institutions. If your current cards are not giving you cash back on purchases then it’s probably time to explore what other options are available.

The money back reward system

Credit cards that pay you cash based on the amount of purchases that you make with them.  These cash back reward systems are very similar to other points or flight based reward programs. The main difference is that you can opt to be paid out in cash and use the money at your pleasure. You are not constrained by the limited products and services offered in some reward programs. The cash option is especially suitable if you don’t do a lot of travelling. No point in accumulating air miles that collect dust in some dormant account.

Click here to compare credit card offers

Money back cards pay a percentage of your purchase back to you in cash. The rates are variable but a typical card will earn you one percent cash back on all purchases with up to five percent on purchases at select retailers or retail categories. Money accumulates and is reported on your monthly statement. When you’re ready for your cash you simply request a check mailed to your address or have the money credited directly to your bank account.

Top three money back card features:

1. Sign up bonus – When researching new credit cards keep an eye out for cash sign up bonuses. The bonuses can range in value, sometimes up to $150.  If you make a specified dollar amount in purchases within the first few months the bonus will be credited to your reward account.
2. Introductory APR – Many cards offer a low APR (annual percentage rate), sometimes as low as 0%, in order to woo you. Remember that these are introductory rates that will go up, usually after six or twelve months. Find out what the rate will be following the introductory period. This often depends on your credit score.
3. Premium cash back rates – You want to earn the most money back possible, so find out how widespread the premium offer is. Some cards have rotating premium categories. If you plan on using your card at supermarkets and gas stations then confirm that these categories will always offer the premium five percent cash back rate.

Are money back cards for everyone?

The simple answer: No. If you carry a balance you might save more money by opting for a card that offers a lower long term APR. Reward cards typically charge higher interest rates to offset the costs of their programs. Also, individuals with poor credit scores might not qualify for money back cards and their associated bonuses. If they do they might end up paying extra high interest rates. If the card has an annual fee then you should consider whether you will be using it enough to cover the cost.

Money back cards, when used wisely, can help put hundreds of dollars pack in your pocket. To find the card that works best for you look for a card that compliments your existing spending habits.

By Matt

If you currently carry a balance on your credit card you are probably making some pretty steep monthly interest payments to your credit card issuer. Carrying even a modest balance can be very expensive. If you carry and maintain $2,500 balance and you are paying 14% APR (annual percentage rate) then you are paying $350 in annual interest charges. On average, people who carry a balance on their credit cards pay a higher interest rate, and people who carry large balances pay even higher interest fees. This is, after all, the bread and butter of the credit industry. So, if you could reduce your interest charges to, say, nothing, you would, right?

What is a balance transfer

A balance transfer involves a shift of your current credit card debt from one or more cards to a new credit card. The new credit card issuer will pay off your existing debts and carry the consolidated debt for you. All interest payments will now be made to the new credit card issuer.

How does it save me money?

You save money because, ideally, your new credit card is offering 0% APR on balance transfers.  You agree to be a customer and they agree to cut you a break on your interest. Does the deal seem too good to be true? That depends on whether you are able to pay off your balance before the introductory period. Your new low rate will not last forever. Most introductory rates on balance transfers have a time limit, usually between six and 18 months. Additionally, there is usually a fee involved in the transfer, typically 3 to 5 percent of the amount transferred. The best cards for balance transfer will have a low transfer fee and a long introductory period.

Three ways ensure you benefit from a balance transfer

1. Pay off your balance. If you don’t pay off your balance during the introductory period you will be right back where you started. Depending on your credit score, your post-introductory period interest rates will jump from 0% to the 12% to 22% range. You might end up with higher interest charges on your new card than your old one.
2. Shop around. Make sure you get the best deal you can. Get the best combination of grace period and transfer fee you can. Don’t let yourself be wooed by other reward programs, these cards often carry a higher APR when the introductory offer expires. Remember your goal is to get out of debt.
3. Use credit wisely. You’ve suddenly freed up some money that was going to debt financing.  The best use of the extra funds will be to pay down your balance. Your new card may have a higher credit limit. Avoid using it. Once your balance is paid off keep it that way. You will benefit from lower interest rates in the future and an improved credit score.

Choosing the best card for balance transfers involves a close look at the introductory offer and the transfer fee. Depending on credit score, not everyone will qualify for 0% APR offers. Ensure you make the best use of the introductory period.

By Matt

Navigating the sea of credit card reward programs can be a daunting prospect. The number of card issuers and their related reward programs seems endless. We’ve all seen the kiosks in airports and malls, smartly dressed twenty-somethings with fierce smiles and clipboards in hand, determined to “just ask you a few questions” often in exchange for a “free gift.”  They may very well be offering a fantastic deal, but you need the tools to confirm their claims.

To determine the best card, you need to evaluate your own financial situation, spending habits and needs. The two main considerations for reward cards are: Does the reward structure allow me to maximize my reward potential, and am I going to use, or be able to use the rewards that I accumulate.

Click here to compare credit card offers

The reward structure

Individual credit cards vary in how they award points to their cardholders. Often a sign up bonus will be offered to get the application process started. Remember that the sign up bonus will require a certain dollar amount of purchases be made on the new card within a timeframe dictated by the card issuer before the bonus points are placed in your account. Once you’ve received your new card you can start accumulating rewards. Make sure you understand how the rewards are earned. Often you will accumulate reward points faster by shopping at specific sponsored partners. The best plan for quickly increasing your reward balance is to make sure that the sponsored retailers are places where you already shop.

Points, points, points

Generally, points are awarded at a flat rate based on purchases made. The ratio is dependent on the card and what a point’s value is. You may earn one point for every twenty dollars spent or a thousand points. The number of points really doesn’t mean anything.  You need to consider the value of the points earned. A good way to compare is to go to two reward programs websites and see how many points a $25 gift card costs. Then compare how much money must be spent to accumulate the required number of points. You may be a points millionaire, but if an individual point only has a value of $00.0001 you have accumulated exactly $100 worth of points.

Reward alternatives

Sometimes points are referred to as miles, which can be equally as confusing because they seldom have anything to do with the number of miles you will travel when you redeem for a flight from New York to Los Angeles (especially when your reward flight will probably have you stopping in Chicago, Denver and Phoenix). Miles usually work the same way as points and can be redeemed for travel, products or services.

Finally, in lieu of points-based programs there are cash back credit cards. Under a cash back system anywhere from one to five percent of purchases will be credited back to the account holder as cash. The accumulate cash can be redeemed via check, direct credit to your account, or redeemable for products and services on the reward website. If you do not travel and do not want to be constrained by products offered through a reward program then cash back makes sense.

The best card for rewards is most accurately evaluated on a case by case basis. Understanding how quickly you can accumulate points based on your spending and whether the rewards match your personal tastes are the best guides in determining a perfect fit for you.

By Matt

With a veritable glut of cash back credit cards available to consumers, it can be a time consuming and tedious effort to determine which cards offer the best deals. As with most things in life, when evaluating cash back credit cards the devil is often in the details. And when choosing a credit card that is right for you it is important to consider whether the reward structure matches your existing spending habits. You do not want to have to go out of your way in order to receive the promised compensation.

How can I maximize my cash back?

The standard rate of redemption on most cash back credit cards is one percent. Simply put, for every $100 in purchases made with the credit card the card issuer will show $1 in earnings on your monthly statement. In addition to the base rate, many cards offer a premium redemption rate of five percent. The premium rate is paid on purchases made at select retail partners or select categories of retailers and service providers. By sticking to the stores where the premium rate is offered you increase your rate of cash back earnings fivefold. If you spend $150 per week on groceries, and supermarkets are one of your premium categories, you can expect $390 in cash back earnings in one year for buying groceries you needed anyway. This is why it is so important when making a comparison to match potential cards with your spending habits.

Where to compare?

At DontSpendMore.com, we have created a free credit card comparison tool. Click here to compare credit card offers.

To find the card that works best for you, you need to know which characteristics to consider when making a cash back comparison. Here are a few of the most important features:

• The real cash back rate. Make sure you are getting what is advertised. After taking a look at the fine print you might discover that the cash back rate is graduated, starting at just 0.25% for the first $1000 in purchases.
• Premium rates. Do you shop at the stores where you will receive the premium rate? If not, keep looking. Also be aware that some credit cards rotate their premium partners throughout the year. If this is the case you will need to keep on top of where you will be earning the most rewards.
• The payout. Is there a threshold of earnings that must be accumulated before you can request a check? Ensure the payout is available in cash and not just redeemable for online merchandise. Also check to see if rewards have an annual cap. Some cards will stop paying once you have accumulated $300 or $500.

If you are able to make your credit card work for you without a significant change in your spending habits then it is a win-win situation. With the right approach it will be the easiest money you make this year.

In addition to cash payouts, benefits can be maximized by buying gift cards and other discounted products through the credit card’s website. Say gift cards for a chain supermarket are available at a discounted rate. If you use your earnings to buy $25 gift cards for $20 apiece, you can add $90 to the $390 you already earned.

By Matt

At least that is the idea when simplified. A credit card issuer returns a percentage of every purchase made with the card to the cardholder. In practice, however, the formulas used to calculate cash back can be complicated and confusing. Since credit card statements usually just tell you the amount of cash back you have earned, not how or where you earned it, trying to figure out how you can maximize your savings can feel like beating your head against a wall. Having an understanding of how the rewards are calculated, and how different offers vary, will allow you to select the cash back credit card that is right for you.

Calculating your cash back

Most credit cards offering cash back redeem one percent of all card purchases back to the cardholder. In addition to the base rate, premium redemption rates are offered when the card is used at sponsored partners or specific categories of retailers. For example, one card might offer five percent on all purchases at supermarkets and gas stations, another card might require you to shop at a specific supermarket to earn the premium. Sometimes the premium is available at particular stores and particular categories. It is a good idea to frequently check the credit card website to see where premiums are being offered.

In addition to earnings, cash back rewards can be maximized when redeemed for gift cards or discounted items online. Typical offers allow you to purchase $25 gift cards for $20 rather than redeeming for straight cash.

How do I redeem my earnings?

Redemption is usually made available through a check mailed to your address or via a credit to your bank or credit card account. Some cards require the accumulation of a specific amount, $50 or $100, before redemption can take place. Generally, the rules for redemption online are more relaxed than taking a straight cash payout.

Three restrictions you should be aware of:

1. Rotation – Categories and partners offering the premium cash back rate are often rotated throughout the year. Some cards let you choose the categories where you can earn the premium rate. Check your invoice and monitor the credit card’s website.
2. Maximum redemption – Many reward credit cards put a limit on the amount of rewards that can be earned in a year. If you reach your limit it might be a good time to start using another card if you want to continue earning rewards.
3. Introductory offers – They are used as added incentive to get you to sign on the dotted line.  Make sure you are aware whether your introductory interest rate will jump to 22% after six months. Sign up bonuses usually require you to hit a spending target with in the first few months before they are triggered.

A cash back credit card can offer exactly what it says: cash back to the cardholder. As long as you are aware of your reward structure, you can make your credit card work to put more money in your pocket.

By Matt

Wouldn’t it be nice if you could save money on all your purchases? You would no longer be constrained by retailers’ sales, shopping on your own time and at your own convenience. With a vast variety of credit cards offering reward programs it is now possible for you to earn cashback with every purchase you make.

How does it work?

Credit card issuers offer a variety of reward programs as incentives to use their card when making purchases. Everyone is familiar with flight reward programs, where miles are earned and can be redeemed for travel. But if you don’t travel very often a cashback reward system might be a better fit for you.

With cashback credit cards a percentage of your purchase is redeemed back to you in the form of a check or credit to your account. Most cards offer a one percent of all purchases redeemed to the credit card holder. Premiums rates, usually up to five percent, are offered on purchases at select stores or retail categories such as gas stations and drug stores. The availability of premium rates varies depending on the credit card and their partners. Frequently premium rate offers rotate between different categories throughout the year so it is a good idea to watch the credit card website to ensure you are maximizing your rewards.

Best cashback deals

The formulas used to calculate rewards or earnings can sometimes be complicated. If you find yourself becoming confused when trying to estimate a card’s potential savings you might want to choose a card that has a more straightforward reward structure. Here are a few of the best offers to watch for when considering a new reward-based credit card:

• Bonuses – Many credit cards will offer a sign up bonus, usually up to $150, when you apply for the card. The catch? You will have to spend a specified amount of money with the card in the first few months in order to redeem the bonus.
• Low APR – Reward-based credit cards usually carry a higher interest rate than other cards.  Look for a card that offers low APR (annual percentage rate) in addition to the reward program. If you can transfer the balance from your existing credit card then you will realize some real savings. Keep in mind that low APR is usually restricted to the first six or twelve months. Find out what the interest rate will be when the introductory rate expires.
• Increased online savings – Instead of redeeming straight cash, you might be able to maximize your rewards by spending your earnings through the credit card’s website. Common offers include discounted gift cards and sponsored products priced below retail pricing.

When choosing the right cashback card for you, consider your spending habits. Savings can be easily offset if you find that you have to divert from your typical purchases in order to earn more rewards. Look for a card that compliments your lifestyle and financial situation.

By Matt

Chances are you already have a credit card that offers some type of a reward structure. These reward programs generally allow the cardholder to accumulate points or earn cashback when they make purchases with their credit card. In the exceedingly competitive credit card market reward programs are offered by financial institutions as incentive for the consumer to use their card. If you fully understand how reward structures are formulated, you can maximize the cashback bonus that you receive.

Types of bonuses available

The most common bonus offered by credit cards is the initial sign up bonus. With a cashback credit card, the bonus is usually between $50 and $150 and requires the cardholder to spend a certain amount of money within a set timeframe for the bonus to be released. For example, a card offering a $100 sign up bonus might be released only once $500 worth of purchases are made in the first three months. Other typical bonuses include a premium cashback rate, usually five percent, for purchases made at select categories of retailers (e.g. gas stations or grocery stores) or at select sponsored retail partners. Discounts are often offered when cash earned through the program is used to buy products or services through the credit cards website.

Click here to compare credit card offers: 0% intro APR

Increase your rewards

If your goal is to maximize the benefits of your reward program then it is important to fully understand how they are calculated and use the bonuses to your benefit.

• If a credit card offers a premium on grocery purchases then exclusively use that card for purchases at the supermarket.
• Take advantage of discounted gift cards and online purchases. Some cards will offer $25 gift cards for $20.  This offer would increase the value of your cashback by 20%. Items available through online redemption are also usually discounted from retail prices. Shop and compare.
• Keep an eye on your reward website. Gift cards and other products occasionally go on clearance and steep discounts (sometimes up to 75%) are available.
• If you carry a balance on your current credit card it is a good idea to look for a card that offers 0% APR on balance transfers. Even a modest $1,000 balance will see annual savings of $150 if you are currently paying 15%.

Three items that will offset your earnings

1. Annual fees – If a credit card charges a $89 annual fee then you should deduct $89 from any savings that you anticipate.
2. Rotating premium categories – Many cashback cards rotate the category of retailers where you earn a premium reward rate. Monitor the premiums offered to ensure that you are earning what you think you are earning.
3. Thresholds – Some cards require a certain amount of cashback to be earned in a year before redemption can take place. If the threshold is $100 and you earned $90 in rewards you could potentially lose that money.

Cashback bonuses can be maximized if you understand how the reward structure works. Make the most of your reward program by letting your credit card work for you.

By Matt

Credit card reward programs have become so prevalent in recent years that consumers expect —  even demand — that they should be receiving something in return for spending money (something besides the item they are purchasing). As rewards programs have become the norm, and paying with cash is becoming more obsolete, banks now offer cashback debit cards as an incentive to use their product. Reward debit cards have much in common with their credit card kin, but it is important to understand exactly what your card is offering in order to evaluate it.

How does a cashback debit card work?

Cashback debit cards redeem a percentage of purchases made by the consumer. The cash reward is made available by check or it can be credited back to the cardholder’s checking or savings account. Typically the account holder must accumulate a specified amount of money before she is able to request a payout. In some cases, points are earned for making purchases and can be converted into cash or gift cards for specific retailers. Many banks require the account holder to carry a minimum balance in order to be eligible for reward programs.

Why should my bank pay me to spend my money?

The answer to this question lies in the system by which banks charge (earn?) fees. Most cashback debit cards only offer the reward on pin-less transactions. These are transactions where a signature is required rather than a pin number. When the transaction is being made, the consumer selects the credit option on the pin pad and signs for the purchase.

There is no difference to the consumer because the funds still come from a bank account. The difference to the bank is the amount that they charge for the two different types of transactions.  Debit purchase fees are governed by legislation and are a fraction of the 1.5% – 4% of the transaction that is charged to a business for accepting a credit card payment.

Essentially, the bank is giving you a cut for using a method of payment that costs the retailer more money. It’s a win-win proposition – unless you’re the retailer.

Cashback: Debit Versus Credit

For the most part, debit card reward programs are not as lucrative as credit card reward programs.  So why not just stick to using your credit card and earn cash faster? For starters, debit cards use money that is sitting in your bank account, whereas a credit card transaction is a loan that must be settled with the credit card company. Avoiding credit cards is one way of avoiding debt. Credit card companies can charge up to 24% interest on unpaid balances. Many credit card reward programs charge an annual fee which will offset any reward depending on how much you use the card. Also, some people may not qualify for credit cards, while others are simply anti-credit.

Deciding whether a cashback debit card is right for you involves considering whether the structure of the program makes sense from your financial situation. A good rule of thumb is to determine if you already spend in a way that compliments, or optimizes rewards. If you have to change your spending habits to make it work, then it doesn’t work for you.

By Matt

With the abundance of credit cards available, and the endless variety of rewards programs associated with them, it makes sense to do some comparison shopping before deciding on your next credit card.  In the last decade, cashback credit cards have become a popular alternative to the standard flight reward programs offered by credit card issuers.

What is a cashback credit card?

Cashback credit cards use a formula — usually a percentage of the amount of money you spend with the card — to calculate a cash reward payable to the cardholder.  Typically, one percent of the value of all purchases will be redeemed to the consumer.  In reality the formula usually isn’t really that simple.  Many cards offer a premium; say five percent, on purchases at certain types of stores, like supermarkets or drug stores.  With some credit cards you must shop at specific brand stores in order to be eligible for the cash incentive.

Click here to compare cashback credit cards

What’s the catch?

Good question. The answer: there really is no catch.  As long as you pay your statement balance in full each month you will benefit by receiving cash back on the purchases you make with your card.  But that doesn’t mean there aren’t restrictions and other provisions make reading the fine print worth the time.

Caps and accumulation thresholds

Some cashback cards cap the amount of cash rewards that can be accumulated in a year.  If your card has a $400 cap, you will not accumulate any more rewards once you have reached the limit.  Many cards also have a minimum accumulation threshold before the reward can be redeemed. For example, you might have to accumulate at least $100 in rewards before you can cash in.  Finally, some cards have a graduated reward formula, where the cardholder might earn 0.25 percent on the first $1,000 spent, 0.50 percent on the next $1,000 and only reaching one percent cash back on money spent in excess of $2,000.

Three incentives that make cashback cards stand out

1. Sign up bonuses – Does the card offer a sign up bonus?  If not you might want to keep looking.  In order to get their card in your wallet, many credit card providers are offering bonuses.  Anywhere from a $25 gift card to $150 cash is currently being offered.
2. 0% APR – If you’re carrying a balance on your current credit card you’d probably like to have the interest rate lowered.  Look for a credit card that lets you transfer your balance and cuts the rate on the transferred portion. Additionally, some cards offer 0% interest on purchases for the first 6 or 12 months.
3. No Annual Fees – Annual fees.  Some cards charge them, some cards don’t.  You probably want to be in the latter group.

If you’re willing do to some comparison shopping, you will be able to find the credit card that suits your personal and financial situation.  Remember to look closely and ask questions to ensure that you understand all the terms and conditions.