With so many rewards programs out there, it is hard to know which is right for you. Before you sign up for any credit card rewards program, ask yourself these key questions to make sure you are getting the best deal while keeping your credit intact.
- What's the interest rate?
- What's my credit score? If your score is below 700, card companies are unlikely to approve your application. Plus, your credit will take a hit due to the inquiry.
- Will I carry a balance? Rewards cards charge an average of 17.83 percent in interest. Whatever you gain in rewards will be erased in interest charges.
- Do I plan on borrowing money? Applying for a card can temporarily make your credit score go down. if you plan to buy a car, take out a mortgage or sign a lease in the next 6 to 12 months, hold off until you don't need great credit.
- Is there an annual fee? If the card carries one, consider whether you’ll earn enough rewards to justify the outlay.
- Do rewards points expire? If so, when?
- Will I use them? About 75 percent of airline rewards go unused every year. Make sure to select the card with the rewards most relevant to the way you shop.
- Am I spending money only to earn rewards? If having a rewards card makes you want to shell out extra money just to receive cash back, don't apply.
- Do I get a bonus for signing up?
- What is the points-to-spending ratio? Look for cards that give you at least 1 percent of what you spend (putting $100 on your card should earn you at least $1 in points or cash back). For frequent-flier cards, look for a match (spend $100, earn 100 miles).
- Is there a cap to the rewards?
- Can I do better? Cards woo with offers that change all the time—such as more bonus sign-up points or waiving the first year’s annual fee. Hold on to any offers you receive, and if you hear of a better deal, call the issuer.