What Are The Real Benefits To Using A Credit Card?

Some benefits of having a credit card are obvious. You don't have to worry about minor cash emergencies when you have plastic. You can take advantage of a great bargain even if you don't have the cash on hand. You can make purchases online or over the telephone without having to mail out a cheque. But there are other benefits to using credit cards that aren't quite so obvious. Depending on the type of credit card you choose - or how clever you are about using the right credit card for the right purpose - credit cards can help you save money, and even put a little extra into your pocket.

Compare credit cards - low interest credit card vs. reward credit credit cards
Different types of purchases belong on different types of credit cards. Knowing which type of credit card is best for long term purchases and which you should use for your day to day expenses isn't hard when you compare credit cards and their features. Most people think that the ideal credit card is one that offers a low APR - but that's really only half the story. There are basically two kinds of credit card benefits - those that save you money by costing you less, and those that save you money by paying you back.

Low interest credit cards
If you're using your credit card to pay for large purchases over time, then you should be most interested in credit cards with low interest rates. But interest rates are only important if you're planning to carry a balance on your credit cards. The real benefits of using credit cards, though, lies in playing off the reward schemes to get discounts on nearly anything you want.

Reward Credit Credit Cards
Reward credit cards offer a different kind of benefit. Most of them carry higher interest rates than credit cards that don't offer cash back or rewards points - but that won't matter if you only use them for charges that you pay off in full each month. If you do that, you won't incur any interest. If you give in to temptation to live beyond your means, though, you'll fall into a credit card debt trap that may be difficult to get out of.

There are many different reward credit card schemes, ranging from cash back to reward points to discounts on memberships to clubs. Don't just jump at a credit card rewards scheme that sounds good, though. Take the time to compare credit cards and their rewards with the way that you spend money and the purchases that you make. A credit card that gives you reward points that you can spend at merchants you don't shop won't do you much good at all, no matter how much the reward points are worth.

On the other hand, a reward credit card that awards you points that you can spend at your favorite CD shop or clothing store is eminently worthwhile. Even better are the reward credit card schemes that will let you trade in your reward points for gift or cash cards that can be spent anywhere at all, or those that pay you back in discounts on things that you buy most, like gasoline.

How to add up cashback and reward points
How much can you really add up in credit card reward points? And is it worth it?
Add up what you spend each week at the grocer and pharmacy. For the average family of four, those expenses may run about £150 a week, or £600 a month. At 2% cash back - a typical rate for a rewards credit card - you'll get £156 back. If you purchase all your gasoline with a credit card that pays 5% cash back on gasoline purchases and you spend £50 a week on gasoline, you'll get another £130 back. That's half a week's wages just for paying attention to the credit card you use.

You can compare credit cards at moneyeverything.com, and choose between many different companies that offer cash back credit cards, low interest credit cards and reward credit cards, then apply online for the best reward credit cards.