A rewards credit card can certainly add some heft to person’s wallet. After all, what other payment method lets you earn points, miles or cash back on all of your purchases?
Still, in spite of the perks, this type of plastic just isn’t for everyone. For starters, rewards credit cards tend to carry higher interest rates than their no-frills counterparts. And some carry high annual fees that you may not recoup, depending on your spending habits.
That’s not to say you should be stuck with your starter, secured or student credit card forever. If you’re looking to upgrade, here are some signs you may be ready for a rewards credit card.
1.You’re Paying Your Monthly Balances Off in Full
Rewards credit cards best serve people who don’t carry a balance since points, miles or cash-back rewards can otherwise be negated by the interest. If you’re in the habit of always paying balances off in full each month, you might be ready for some premium plastic. If not, you may want to stick with a simple or low-interest credit card. And, if you’re already carrying a lot of debt, you may want to look into a balance transfer credit card to minimize your interest costs.
2. You’re Meeting All of Your Budgeting Goals
It can feel great to earn points, miles or cash back, but you don’t want to spend more than you normally would each month just to bolster those coffers. Your ability to maintain a budget is a good measuring stick of your overall financial health — and can also provide hints about how disciplined you might be with some new plastic in hand.
3. Your Credit Score Is in Great Shape
Not all rewards credit cards are created equal, but a good credit score will help you qualify for the best of them. Plus, having good or excellent credit is another sign that you’ll use the new line of credit responsibly. In either event, it’s a good idea to check your credit before you fill out any applications. You can do so by viewing your two free credit scores each month on Credit.com.
It’s also important to read all of the terms and conditions associated with a card you are considering carefully. You’ll want to comparison-shop to find a card that’s right for you. You can check out our recent ranking of the Best Cash-Back Credit Cards in America here.
More on Credit Cards:
- Credit.com’s Expert Credit Card Shopping Tips
- How to Get a Credit Line Increase
- Are Annual Fee Credit Cards Worth It?