By Robyn A. Friedman
Airline miles, free hotel nights, cash back. The credit card solicitations are tempting, as banks woo you with “rewards” in exchange for your business.
But no matter how appealing an offer may be, the rewards portion of your consumer credit agreement tells only half the story. Don’t overlook the other, more important, features of a credit or debit card account when considering your next card.
“Although rewards should be one of your considerations in shopping for a new card, other factors like the introductory rate and period length, regular APR rate and issuer/network all are important as well,” says Jill Gonzalez, an analyst for CardHub.com, a Washington, D.C.-based personal finance website. “By weighing all your options, you’ll be sure you’re not getting swindled by a seemingly lucrative reward system that you may not even be eligible to take part in.”
The allure of rewards cards has become so compelling to consumers that the Federal Deposit Insurance Corp. (FDIC) recently issued the following recommendations when choosing and using bank reward cards:
Comparison shop. Review all of the terms, including fees and other costs, for each card you’re considering. One credit card might offer terrific rewards, but the fees may offset them.
Select a rewards program that fits your lifestyle. If you dine out a lot, don’t pick a card with high earning rates on groceries,for example.
Don’t forget how the card earns rewards. Sure, you may get 5 percent cash back on groceries, but the fine print may limit the reward to the first $1,000 spent each year.
Monitor your account regularly. Make sure you receive all earned rewards.
Remember that you can lose access to rewards. Late payments may allow the issuer to revoke your rewards. Some rewards may also have an expiration date.
Avoid signing up for too many rewards programs. Spreading purchases among multiple cards may actually slow down the rate at which you
Consider mobile banking. Some banks have relationships with retailers that give consumers extra rewards. It’s often easier to access those rewards while shopping by using a mobile app.
Most importantly, remember to use the rewards you earn. “Consumers are currently leaving roughly $4 billion in annual rewards value on the table,” says CardHub’s Jill Gonzalez. “That’s especially frustrating when you consider that we racked up over $60 billion in credit card debt in 2015.”