Credit cards are a standard part of everyday life for most Canadians. It’s a convenient way to make purchases both in stores and online, and they provide the flexibility to make purchases when you may not have the exact right amount of cash on hand.
They can also come with some great rewards and benefits that save money or help with other aspects of life. But, as with most things related to finances, it’s important to do your research and know all the information on credit card reward programs to ensure that these programs are beneficial to you.
Airline Travel Miles
One common type of credit card reward is airline miles, which allow you to rack up miles that you can spend with certain airlines by using your credit card for everyday purchases. Sounds great, right? It definitely can be if you choose the right card and program for you, but there can also be pitfalls.
First, these cards are usually tied to a specific airline. So, if you need flexibility with your travel, like being able to choose a plane ticket from a wide variety of airlines, you may want to avoid using airline points for that purchase. Some cards are very flexible in which airlines accept their miles, but those cards are often not accepted in some establishments, so if you use one for your primary purchasing, you’ll want to carry a backup form of payment with you.
Additionally, some airline miles cannot be redeemed at peak travel times, like around the holidays, so pay attention to when you’re trying to book travel. You don’t want to miss a trip to visit family for the holidays because your points don’t apply.
Still other cards offer more flexible travel-related points, which can be applied for hotels or car rentals. These can be beneficial, but the cards sometimes come with high annual fees that could negate any savings from using the points. Think about how much you’ll be using the card before you sign up, and make sure that it will be worth it for you.
Discounts and cash back
Who wouldn’t want a little extra discount or cash back with a credit card purchase? Typically cashback arrangements mean that you’ll get a certain percentage back on purchases like gas or groceries. Similarly, some credit cards offer those rewards in the form of a gift card or simply offer the gift as a bonus for signing up for the credit card.
These perks can be very enticing, but again, it’s critical to read the fine print on any credit card agreement. These types of cards can come with high interest rates, foreign transaction fees, or earnings caps. If you pay off your cards every month and don’t travel much, these may not be a concern for you, but it’s always smart to do your research before signing on the dotted line.
Introductory rates for purchases or transfers
The interest rate is one of the most important numbers you need to know when signing up for a credit card. This number represents the percentage of your balance that you’ll have to pay on top of paying off the balance itself if you carry a balance from month to month. The lower the rate, the better. Charging interest is how credit card companies make money, so they want to charge as much as possible, but they also have to stay competitive.
A common practice among credit card companies is to offer low or even zero interest for purchases or balance transfers during an introductory period. This can be incredibly useful if you plan to pay off the full balance before the introductory period, but again, pay attention to the terms once that introductory period is over. If the rate skyrockets and you’re unable to pay off your bill every month, you’ll end up paying more than you bargained for.
Credit card rewards can be great to get access to various perks or save money, but always read the fine print and make sure you know exactly what the terms of your deal are before you sign, whether the perk in question is airline miles, cash back, or low interest rates.