How to Find a Suitable Rewards Credit Card?

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The rewards credit cards have the potential of assisting you in stretching your budget, providing cashback, hotel points, or airline miles for your spending with various other benefits.

Getting the maximum out of your cards is based on selecting the suitable one for you, clearing off your balance each month, and maximizing the rewards with the redemption choices you make.

There are many options when it comes to reward and offer credit card; however, they all come under the following three categories.

  1. Cashback
  2. Points or miles based
  3. Co-branded with airlines or hotels

Based on your lifestyle and the things you hope to earn using a rewards credit card, you might only require one or you may fare better by using a combination of 2 or more. We will take you through the alternatives and show you the ways for selecting rewards cards, and some of the top cards in every category. 

Make a Well-Informed Decision

Let us get this out of the way before proceeding-

In case you hold a revolving balance already on your credit card or are unsure about being able to clear the amount due every month, a reward and offer credit card isn’t the best alternative for you.

You must know that banks are not naturally charitable. If they are offering you something free of cost, whether it is cashback, 0% introductory APR, or redeemable points, they are essentially taking a chance that you will generate more amount of income for them as opposed to what they spend on you.

The only option for avoiding being such a “loyal customer” of the bank is by paying your monthly balance in full. If you are unable to do so, you will end up with high interest & late payment fees to pay, which will outweigh any of the benefits that you are entitled to receive. Some of the rewards cards charge an annual fee, which should be compared from what you earn on your credit card.

Now, keeping the caveats apart, there are a lot of people who gain from these reward cards by using them responsibly. Let us go through the above-mentioned three categories to figure out which one is suitable for you. 

Points, Miles, or Cashback?

Selecting a rewards card starts with all your needs and your lifestyle. You need to answer the question- What do you expect to gain from the rewards card? In case you do plan on redeeming points for your travel expenditure, will you be able to buy enough using the card (considering that you must always clear your balance every month) for accruing the number of points you will need?

In case you are unsure or have multiple objectives for your reward and offer credit card, it makes sense to open multiple accounts and put each one into the best use. For instance, you can use a cashback credit card for the purchases that are eligible for a higher return of percentage like groceries. Then, in this case, you can use a points credit card for the remaining purchases for putting towards the travel rewards.

You must also take into consideration the sign-up or introductory bonuses offered by different cards. This may include an introductory 0% APR for your 1st year or a particular amount in cash reward in return for spending a certain minimum amount for the first few months.

The following are the 3 most common kinds of rewards cards.

Co-Branded Cards

Most of the airlines or hotel chains offer co-branded cards with a system of point-based rewards. The return rate tends to be higher as opposed to what you would have received if you were using cashback or general points card for paying your travel expenses. But this is only limited to the sponsoring airline or hotel.

Most of these cards include some extra perks such as no charge on checked luggage, elite status, and many other travel-related benefits.

Cashback Cards

This type of credit card offers you a certain percentage (usually 1-2%) back for each dirham you spend using it. Some of these cards will offer you a better return for specific spending categories (like groceries and gas).

Others will put a limit on the maximum amount of money you can earn every year. However, these cards are the easiest to understand and use, making them the best alternative for people without the patience or time for making the most out of a travel or points reward and offer credit card.

Transferrable Miles or Points

The third type of rewards card is the one with a transferrable miles or points program. It offers a flexible option, which can be more attractive than the rest of the types of credit cards.

You have the option of choosing between redeeming your points at a hotel stay or towards a flight ticket on an airline of your preference, move points to a travel rewards program outside, or convert the points into cash rewards. Although these cards are not the most rewarding and are beneficial for travelers specifically, they need a little more effort for maximizing the value. 

Things to Consider While Selecting a Suitable Reward and Offer Credit Card

Before you select a rewards card, take into consideration the amount of spending needed on a card for earning the introductory bonus and the time in which you need to do it. In case it is more than what you generally spend, it is not a suitable one for you. It should be the balance that you can pay back reasonably without having to carry a balance. Here are some other things you should take into consideration.

  • International Transaction Charges: Some of the reward credit cards might levy fees for making purchases overseas. Also, based on the payment network of your credit card, you may face limited acceptance on your card outside the UAE. Consider these potential issues while making your decision.
  • Annual Fees: The annual fees charged on your card can be pretty high sometimes, so it is essential to make sure you are gaining enough rewards from the card for offsetting them.
  • Cardholder Benefits: Some cards offer special perks such as airport lounge access, valet parking, etc for sweetening the deal for you. 

If you have a good financial standing and a good credit score, then a reward and offer credit card may help you in earning benefits by doing the regular shopping.

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