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Be Smart With Your Rewards Card

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These days, a large number of consumers are once again beginning to feel better about their finances and as a result, are looking for new credit cards.

But because of the way the recession reshaped consumers’ attitude toward credit card spending in general, many are looking for ways to cut the costs associated with these cards, and one way many are choosing to do that is with rewards cards. As a result of increased interest in these accounts, many lenders are also diversifying the various offers for their rewards cards.

Some now give consumers bonus rewards just for opening their accounts, and others incentivize certain types of purchases by giving them more cash back or points for spending in certain categories. For consumers who view these rewards they can receive for spending as they normally would as “free money,” it’s important to look deeper into these accounts before settling on one.

One of the best ways to do this is for them to examine their previous account use and determine what are normal repayment and card use habits. For example, those who tend to carry a balance from one month to the next will probably want to find a rewards credit card with the best possible combination of a strong rewards program and low interest rate. Of course, they should also try to figure out whether their spending habits will make it more difficult to see the benefit of these rewards, and if the card has an annual fee associated with it, the cost of that should be considered as well.

Further, because these accounts can incentivize certain types of purchases with rewards rates of double or even triple the usual numbers, consumers should also look at what they most often buy with their credit card. For example, if they typically use their card to pay for gas, finding a card that grants more points for gas purchases will likely make the most sense. Many cards reward grocery purchases in the same way, so those who tend to use their cards at supermarkets can likely find similar benefits.

Of course, whenever consumers open new credit cards, they should examine how doing so will impact not only their debt, but other aspects of their finances as well. Each person’s financial situation is unique, and therefore it’s important to consider whether such a card is right for them.

Image: TommyClicks, via Flickr

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