Which Credit Card Rewards Program Should You Choose?

You've no doubt received lots of offers to sign up for credit card rewards plans over the years. From airline miles and concert tickets to restaurant points and cash bonuses, the range of rewards is vast. While some of these rewards cards can offer perks that make financial sense -- if you use the cards wisely -- others may not be as financially rewarding as they appear on paper and can sometimes even hurt you. It's important to know what you're signing up for, why you're signing up for it, and any penalties you may incur.

Nearly all credit cards have some sort of rewards program attached to them these days, and the decision to go with a particular card is often swayed by what perks it offers. So let's take a closer look at what you should consider.

Your activities

When deciding on which credit card to sign up for, pick a program based on your life's activities, or the things you enjoy doing the most. If you're a frequent traveler regularly shuffling through airports, a frequent-flier card that rewards you based on the number of miles traveled might be a solid option. For the same traveler, a hotel rewards program could be just as good.

The benefit of gas-station card rewards programs is obvious if you drive. So are rewards programs at your favorite retail stores. If you shop at one store a lot, you'll save money and the retailer gets you to spend more -- so everybody wins.

Cash-back rewards are the most popular type of rewards program. You get points based on the amount you spend, and the points convert to cash. Just be aware of your spending habits, so you aren't spending money just to get money. That holds true for any rewards program.

Be on the lookout

Before you enroll in a rewards program, make sure to read the terms and conditions. You need to be aware of any penalties you can incur and how to avoid them. You'll find mention of things like transaction fees, balance transfer fees, late fees, and "card protection" fees in the fine print. Credit cards are notorious for attaching hidden fees to their services, so you always need to be on the lookout.

Note, too, that some programs will reward one activity at the same rate all year round, while others will change their lineup throughout the year. You may get cash back for purchases at certain restaurants in one quarter, and then the same cash back for buying gas the next quarter.

Be cautious

Rewards programs often come with limits on how much you can earn, as well as on how long you have to use your rewards. Many people lose out on their hard-earned points by simply forgetting about them.

So take your time when reading up on what each credit card program has to offer, as well as how and when you can use your points. Remember: The rewards program should always work for you.

And keep in mind that no matter how enticing the rewards may be, you're buying something on credit to get them. You don't want to necessarily spend money just to rack up points. Always treat your credit and debt with care.

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