Credit cards are not just about making big purchases and paying them off in EMIs. Rewards and cashback are also important parts of credit cards, but most of us find them too complicated to understand. Lately, credit card reward programs have become more popular than ever. Have you ever seen a credit card advertisement trying to sell a low-interest rate or easy EMI feature? Probably not, because all credit card providers are focusing on their reward programs and brand loyalty benefits by painting a dreamy vacation picture or a 5-star dine-out.
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How Rewards Work?
Most of the banks assign a certain number of reward points for every Rs. 100 spent on your credit card which can be redeemed for merchandise or gift cards. Some credit cards offer extra rewards on specific usages, such as dining, travel, online shopping, etc. The trick here is that rewards are characteristically complex since they are not calculated in terms of cash. Unless a good deal of points is accumulated, they won't be of much use. Online redemption of reward points is one of the most convenient ways to redeem your earned reward points. You can also convert your reward points into air miles and later redeem them to buy air tickets.
1. Rewards Cards Aren't One-Size-Fits-All
Credit card companies save their savviest marketing tactics for cards with the biggest bonuses, luring consumers in with promises of access to exclusive events and five-figure batches of miles—but the card with the most eye-popping deal may not be the card that's best for you.
2. A security deposit makes a credit card easier to get
If you're having trouble getting approved for your first credit card — say, because you're starting out with no credit at all — try a secured credit card.
3. Your first credit card can build your credit — or ruin it
One of the main reasons to get your first credit card is to boost your credit. If you're not careful, though, it can have the opposite effect. It all depends on what you do.
4. You can see the rates and fees before applying
Credit card issuers are required by federal law to publicly disclose certain terms, such as interest rates and fees, before you apply.
5. Credit card fees are avoidable
It's possible to avoid credit card fees altogether, even if you're new to credit:
Plenty of excellent starter cards, including many secured cards, don't charge annual fees.
Late fees aren't an issue if you pay on time.
