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Credit card rewards programs are so varied, it can be difficult to determine which product should earn prime placement in your wallet. Here’s how to figure out which one you should be favoring.

Interest rate/fee structures are reasonable

Rewards cards tend to carry higher annual percentage rates and fee structures than no-frills products, essentially so issuers can subsidize the miles or points. But a card you’re going to use every day needs to be cost-effective. There are plenty of quality rewards cards that don’t charge an annual fee, including popular cash back cards, like the Chase Freedom or Capital One Cash cards.

In terms of interest rates, be wary of favoring a card whose interest rate is nearing 25%. APR scales on rewards tend to fluctuate between 14% and 22%, but there are a few that offer lower rates to consumers with great credit scores. Discover, for instance, offers APRs between 10.99% and 19.99% on its popular More Card. If you do feel strongly about a certain card and the issuer awards you an APR on the higher end of their scale, you can always call them up after establishing a payment history to see if they will lower it.

[Free Resource: Check your credit score for free before applying for a credit card]

Free Credit Check & MonitoringRewards are concentrated in your most common spending category

A great go-to rewards card is going to be the one that obviously earns you the most points, miles or cash back. You can easily increase earning potential by opting for a card that features maximum return in a category you already spend a lot on. For instance, commuters might want to opt for a great gas rewards card, like the Pentagon Federal Platinum Cash Back card, while foodies might want to opt for a card like the Chase Sapphire Preferred, which offers two points back per dollar spent at restaurants.

If your spending is varied, it might be a good idea to opt for a card with revolving quarterly categories, like the aforementioned Freedom or More. Another way to minimize juggling all the cards in your wallet is to go with a card that offers the same amount back no matter what you are buying. Capital One Venture Rewards cardholders, for example, receive two miles per dollar spent on every purchase.

[Credit Card Review: The Best Travel Rewards Credit Cards in America]

The program is easy to understand

To ensure maximum rewards, it also helps to opt for a card with a program that is straightforward. You may want to avoid overusing a card that limits rewards and you should also check to make sure the points, miles or cash back you do earn won’t expire. It’s also good to be aware of other existing caveats so you can best plan out your spending. For instance, you may have to reach a spending threshold before you earn the maximum return.

If you do opt for a card with revolving categories, make sure you understand when quarters are set to begin and end. Most issuers will allow you to sign up for email or text alerts that will notify when it’s time to enroll again.

[Credit Cards: Research and compare rewards credit cards at Credit.com]

Image: Peter Løvstrøm, via Flickr


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  • http://www.creditcardchaser.com/ Mac Hildebrand

    Great point about the program being easy to understand. Sadly, many people are drawn to rewards programs because of a particular promotion that, although attractive, obscures the person’s ability to compare cards and calculate if the card is right for them. I hope people take note of this point!

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