July 15, 2024
• 2 Minute Read
Shopping online has become commonplace in our daily lives, and using rewards cards can really add up. Rewards cards offer a way to earn points, cash back, or miles with every purchase, turning your everyday spending into valuable rewards. But how exactly do these cards work, how much should you spend to get those rewards, and are they truly worth it? CreditSoup breaks it down and gives you the good, bad & ugly of using rewards cards.
How Rewards Cards Work
Rewards cards are credit cards that offer incentives for every dollar you spend. These incentives can come in the form of points, cash back, or travel miles. When you use a rewards card for your online shopping, the card issuer tracks your spending and credits your account with rewards based on a percentage of your purchase amount. For example, a card might offer 2% cashback on all online purchases. This means that for every $100 spent, you earn $2 back.
How Much to Spend
To make the most out of your rewards card requires a plan. It's important to use the card for purchases you were already planning to make, rather than spending more just to earn rewards. Additionally, some rewards cards offer higher earning rates for specific categories, like online shopping, groceries, or travel. By adjusting your spending with these categories, you get the best bang for your buck out of your rewards. However, you have to remain mindful of your budget and not overspend for the sake of reaping rewards.
How Much You Get Back
The amount you get back depends on the card's rewards structure. For example, if your card offers 1.5% cash back on all purchases, spending $1,000 would yield $15 in rewards. Some cards offer higher cash back percentages for specific categories, which can boost your earnings. To add, many rewards cards come with sign-up bonuses, offering substantial rewards after spending a certain amount within the first few months of account opening. These bonuses can rack up your rewards, making your initial spending more rewarding.
Are Rewards Cards Worth It?
The value of rewards cards depends on your spending habits and how well you can manage credit. If you pay off your balance in full each month, the rewards you earn can significantly offset your expenses. However, if you tend to carry a balance, the interest charges can quickly outweigh the rewards. It's also important to consider annual fees, which can eat into your rewards if the benefits don't outweigh the costs.
Wrapping It Up
Using rewards cards to shop online can be rewarding, but only if you spend and manage your credit responsibly. The key is to choose a card that aligns with your spending patterns, take advantage of higher earning categories, and avoid unnecessary spending. When used wisely, rewards cards can provide significant value, turning your everyday online shopping into a rewarding experience.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.