Are rewards credit cards worth it?

have rights Rewards credit card Your wallet can be a fast track to saving money for everything from a dream vacation to everyday necessities. But credit card rewards are only worth it if you know how to use them This means choosing the right rewards card for your wallet, maximizing your redemptions and avoiding them Paying profit That could wipe out your reward value.

Below, we’ll break down why rewards credit cards might be worth it to you — and some reasons why some customers might want to wait before opening one.

Find out which high-value rewards cards you may qualify for here now

Are rewards credit cards worth it?

Here are two main reasons why a rewards credit card might be worth it to you:

You can save on frequent spending or specific purchases

Rewards credit cards offer cash back, points or miles on qualifying purchases, so they can pay off over time if you choose the right rewards. To maximize value, consider both the type of rewards offered and the rewards structure of the card.

First, decide if you’d prefer to receive cashback, points, or miles rewards. Cash Back Rewards It can be easy to use — you get a percentage back on qualifying purchases, which you can redeem for cash value. But points and miles rewards can potentially be more valuable if you want to use your rewards for travel, either with a specific airline or hotel or using your issuer’s rewards program.

Also, consider how you will earn rewards. If you spend a lot on certain things — like travel, dining or groceries — you may benefit from a card that earns higher rewards in that category. Otherwise, a card with a flat rewards rate across all spending categories may be a better option. Credit card rewards are most valuable if you can benefit over the long term, so choose categories that will help you earn year after year.

You can get additional benefits

Rewards credit card benefits don’t end with cash back or the points you earn. Many of these cards come with high value-added benefits that make them valuable in the long run.

Not only do you get consumer protections like zero fraud liability and identity theft alerts, but many rewards cards include annual statement credits, discounts or credit with certain retailers, travel and car rental insurance, and more.

Plus, many rewards cards have welcome bonuses — which can add a lot of value within the first few months. These bonuses typically offer hundreds of dollars worth of cash back or point value after you meet a certain spending threshold within a certain period of time after opening.

Learn more about the perks and benefits you can get with a rewards card today.

Consider the annual fee

Generally speaking, the better rewards and benefits a credit card offers, the higher its annual fee.

To make sure your rewards card is worth it, compare the value you’re getting with the cost of the annual fee. This is especially true for premium travel rewards cards that can carry upwards of $600 in annual fees.

You can exceed the cost of the annual fee on the rewards alone, especially if your spending is focused on the rewards categories of your card. But even if not, annual statement credits, airport lounge access, partner discounts and other perks can go a long way to offset the cost — as long as you use them.

Qualify with great credit

Many rewards credit cards require at least a “good” credit score (670 or higher, according to FICO) to get approved, but the closer you are to 800 or higher, the more likely you are to qualify.

If you still Build your credit, you may not be eligible for the rewards card you want. Instead of applying and getting denied (which can affect your credit score, at least temporarily), consider opening a credit card for which you’re more likely to be approved. Then, once you’ve used it to build up your credit, you can upgrade to a rewards credit card and start maxing out

Start exploring which cards you may qualify for here now

Avoid paying interest

A rewards credit card is definitely not worth it when you carry a balance.

Credit card interest rates Currently higher than average 20% APR. Even if you score some of the best rewards available today, like 4X points at restaurants or 6% back at supermarkets, collecting interest on your purchases will cost you more than you earn.

If you’re considering a rewards credit card, make sure you have a plan to spend within your means and pay off your balance each month, so you can benefit from the full rewards value.

Should you get a rewards credit card?

If you have good credit and can avoid expensive interest payments, the cash back, points or miles you’ll earn with a rewards credit card can be worth it.

Just make sure you choose a card with rewards that work best for your spending and will help you get enough value to outweigh any annual fee. Then, you can start maximizing your rewards and benefits for everyday savings, an upcoming purchase, free future travel and more.

Compare rewards credit card options here now and start earning more on your purchases!

The views expressed herein are solely those of the author and not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, endorsed or otherwise approved by any entity included in the post.