Choosing Credit Card Rewards and Incentives

At one time there was little to distinguish between one credit card and another. About the only difference was the provider's name, and how much credit they were willing to extend to you.

Nowadays all that has changed, of course. Fierce competition means that credit card issuers are falling over one another to offer you rewards and incentives, in a bid to get you to sign up with them rather than one of their rivals.

In this article I'll be looking at the wide range of incentives on offer from credit card providers, and offering some advice on how best to choose between them. But before we get on to that, I must sound a note of caution.

If you are likely to leave a balance outstanding on your credit card, rewards should NOT be your first priority when deciding what card to apply for.

There are two main reasons for this. Most important, if you are paying interest on an outstanding balance, the cost of this will almost certainly outweigh the benefit of any rewards. And secondly, some card issuers only offer incentives if you clear your balance every month. If you are going to be leaving a balance on which interest is charged, therefore, your first priority should be to pick a card with a low APR (annual percentage rate) and/or a long interest-free introductory period.

If you are confident that you will be able to pay off your balance every month, you should certainly shop around for a card offering the rewards and incentives you want. Here are just a few examples of the kind of offers currently available...

Cashback - This is a very popular incentive. For every dollar you spend on your card, the card issuer will give you back some money, usually once a year. The amounts vary, but typically range from 0.5 to 2 per cent of total spending. There is often a cap on the total amount you can get back in a year.

Gas Discounts - With the price of gas seemingly going up every day, any way of getting a discount has to be worth considering. One card offering this type of reward is the Discover® Platinum Gas Card. This provides a 5% cashback bonus on your gas purchases, and up to 1% cashback on all other purchases.

Travel - Other credit cards let you collect points which can be exchanged for travel bonuses. An example is the Miles Card from Discover®. This gives you 5,000 Bonus Miles after your first purchase, and 1 Mile for every $1 you spend thereafter. Miles can be redeemed for airline tickets, cruises, vacation packages, merchandise, hotel and car rental certificates, and so on.

Vehicle Purchase - A few cards let you earn money from every transaction, which can then be put towards buying or leasing a new vehicle. An example is the GM Card, which credits you with 5% of the value of each purchase you make on the card. This is redeemable toward the purchase or lease of an eligible new vehicle from Chevrolet, Buick, Pontiac, GMC, Hummer or Cadillac.

Other Discounts - A wide range of other discount cards is also available. These range from the Starbucks Visa® Card, which gives you discounts and free products from the well-known coffee-shop chain, to the World Series of Poker® Visa® Card, which lets you earn points you can redeem for WSOP buy-ins.

In summary, before choosing a card, first decide whether or not you will be paying off your balance in full. If not, a card with a low APR and/or long interest-free introductory period should be your priority. Otherwise, look for a card with rewards and incentives that are attractive to you.

To choose the best credit card reward scheme for you, try to put a dollar value on each one, based on your lifestyle and likely expenditure. If you drive a lot, for example, a card which offers a discount on gas may make the most sense. On the other hand, if you are a frequent flyer, a card such as the Miles Card from Discover®, mentioned above, may be more valuable to you over the course of a year.

Having decided on the type of card you want, take the time to study the market and see what is available. Do not simply fill in and return the next credit card application form that arrives in the mail. Credit card comparison sites such as can make this easier for you by listing all the best current card offers for you to choose from, and also have a range of articles offering unbiased advice and information.