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Get out the calculatorMar 15 '01 Write an essay on this topic.The Bottom Line Carefully. Use the same criteria you would in evaluating any credit card. The cash back is just another part of the package. First you should realize that in most cases we are not talking lots of money. Maybe 1% , sometimes more, sometimes less. So if you do carry a balance the interest rate is much more important in figuring your cost. So this review only applies to those of us who always or almost always pay off the balance in full each month. But if you do this and since you are going to spend money anyway you might as well get some of that money back. I'd advise sticking to a no fee card with a grace period. I have always used no fee cards and cards with a grace period on purchases if you pay in full each month. That grace period is very important. Any rebates or rewards will probably be smaller than your interest payments unless there is a grace period on new purchases and you pay for all your old purchases each month. I cards with these 2 features since it is hard to make a mistake unless you run up a bigger balance than you can pay off or forget to make a payment one month. The no annual fee is also important. I see no point in paying a fee (which reduces any potential reward) when there are so many good cards out there. Also if you have no fee and no interest on new purchases the card does cost you anything if you try it for a month or 2 and are unhappy with it for some reason or find a better deal. So carefully read the offer to make sure there is a grace period, no annual fee, or any other fees which you would have to pay. Your situation may be a bit different so you may not have the same criteria I have. But you should always read the offer carefully (even the fine print) and know exactly what you are getting. To identify the best card for you, you will probably need to do some calculating. Cards have different reward structures. One may pay a straight 1% of all purchases and another might be tiered. That is they might pay a quarter percent on the first $500, a half percent on the next $1000., 1% of the next several thousand, and 2% on everything above that up to a certain amount. So these break points between the tiers and any cap on rewards will need to be included in your calculations. You can estimate how much you will charge in 1 year from what you charged last year and what more you could charge. For example, we usually paid our grocery bills by check and lots of small purchases by check. Now we put them on the card and get a reward on each purchase. As a side benefit, the checkbook is much easier to balance when you write 5 checks a month instead of 30. So your level of spending will determine which card has the best reward structure for you. But reward may not be the only factor. General considerations which will be important in any credit card decision (not just rewards cards) may be more important that whether your reward is a few dollars higher. Credit cards sometime change reward structures or maybe you'll find a better deal or maybe you don't like the customer service or something else. If it is a no fee card with a grace period, it cost you nothing to try it. Just get the new card and switch your spending to it. For example, I had a card I really liked and then they changed the reward structure to a much less favorable one. So I looked around and now we using the GE Rewards card. If you are not using the old one anymore cancel it.  |
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