by Marco Angioni II

Created on: January 27, 2009

Credit cards have become an integral part in the financial lives of many people. If used properly, a credit card can be a great financial asset that assists you (assist by way of a good credit score not by way of purchasing power) in making big purchases and enabling you to get important loans. However, if abused, credit cards can make your financial life a living nightmare. As such, always practice sound credit card and debt management. That being said, it is important to note that not all credit cards are created equally.

Companies are doing everything these days to entice people into obtaining a credit card. For example, many companies will offer no interest on cash advances, balance transfer, or purchases for the first year that you own the credit card. Some companies offer a great introductory interest rate and follow that up with a low, fixed interest rate. Still other credit card companies offer rewards in the form of points or airline miles that can be redeemed once the credit card owner obtains enough points. Of all of these rewards, airline miles can be the most beneficial.

If you are the kind of person that uses a credit card for one particular task (e.g., getting gas for your car/truck), a rewards card may be a great option for you. A rewards card is a great option because your credit card use is going to continue regardless. As such, why not get rewarded in more than one way for consistent and proper use?

With the price of fuel increasing and airlines going out of business, it seems that the average airline ticket has greatly increased in price. Additionally, things that used to be complimentary (e.g., an in-flight beverage, checking more than two pieces of luggage, and an in-flight snack, to name a few) now cost money. As such, using points to get discounts on or even free airline tickets, hotel rooms, and/or rental cars (especially if you travel a lot) can save you a lot of money.
Therefore, a travel rewards card may be in your best interest.

Basically, a travel rewards card works the same as a "points" rewards card. Each dollar spent equals a certain amount of travel points. Once you have accumulated a predetermined amount of travel points, you can redeem them for flights, hotel rooms, and/or rental cars. However, if you get a travel rewards card, you still have to make sure it is a good credit card. For example, you should not pay an annual fee simply because it is a rewards card. Additionally, the rewards card interest rate should not be higher than your other credit cards merely because it is a rewards card.

Do not fall into the trap of paying too much for a rewards card merely because it offers rewards. Make sure that there is no annual fee, a low interest rate, and that the points can be redeemed for any flight at any time (i.e., no blackout dates). If your rewards card has these attributes, you will have added a great credit card to your financial arsenal.

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