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Factors to Consider When Choosing a Reward-Based Credit Card

One of the many perks of having an excellent credit score is that you can get just about any credit card you want.  As long as you have income to show and a physical mailing address, you can pick and choose among the best cards the financial industry has to offer.

In fact, the hardest part of the decision could be the abundance of enticing offers coming to your mailbox. You do not want to jump at every offer of free financing or airline miles; there just will not be room in your wallet for all of them. Instead, you want to choose from among the best of the reward-based credit cards, taking advantage of the credit card issuers’ largesse to get free airfare, free gift cards and even cold hard cash.

There are a number of factors to consider when choosing a reward-based credit card. If you have a great credit score, your mailbox is probably overflowing with excellent offers, but how do you choose the one that gives you the most bang for your buck? Here are some things to look at when selecting a reward-based credit card.

The Size of the Bonus Offer

The bonus offers credit card issuers use to entice new cardholders is as close to free money as you will ever get. Whether that bonus comes in the form of free airline miles and trips, free and discount hotel rooms, gift cards or cash, comparing the size and quality of the various bonus offers is as good a place to start as any.

It is easy to compare cash bonus offers, and there are some enticing ones out there. If you look around, you can find bonus offers of $100, $200 and even $300 or more. Many of these bonus offers are tied to your spending, so you will need to make sure you can meet the requirements before you apply. You may, for instance, be required to spend $1,000 in the first three months to qualify for the free cash, but if you pay your bill off each month, that level of spending will not cost you a penny in interest charges.

Cash vs. Points

The comparison is more complicated when the offers are based on points or miles. You will need to check the conversion rate to determine how much each point is worth and how valuable it is to you.

If you are an avid traveler, a rewards-based card with a generous number of miles is probably the best deal. If you love to shop online, a bonus offer good for hundreds of dollars worth of gift cards may be too good to pass up. You will need to determine which offer is most valuable to you, and choose the card accordingly.

The Annual Fee, or Lack Thereof

Some of the most enticing credit card rewards are for cards that carry an annual fee. With so many fee-free cards available, it has become increasingly difficult for fee-carrying credit cards to compete, hence the generous bonus offers for signing up.

The credit card issuer is obviously betting that you will forget about the annual fee until it is too late, but you can beat them at their own game. Many bonus offers include a fee waiver for the first year, so as long as you remember to cancel the card in time, you can pick up some quick cash without paying a cent.

Beating the credit card issuers at their own game is not easy, but rewards-based credit cards give you a golden opportunity to do just that. If you have a great credit score and enough time to fill out a few applications, you could rack up hundreds, or even thousands, of dollars a year in free trips, free hotel rooms, free gift cards and free cash.

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