Choosing the Right Rewards Card

[image error][Full disclosure: I've teamed up with BofA for the day to bring consumers advice on how to choose a rewards card wisely.]  

For the responsible consumer who pays off that monthly credit card balance on time and in full – why not carry a credit card that rewards you for spending?  I’m personally looking forward to buying a new Macbook Air soon with my accumulated credit card reward points. Over the past two years, I’ve managed to rack up enough points (200,000 and counting) to earn this massive freebie. How’s that for delaying gratification?

But with so many rewards cards on the market – how to identify which one is right for you? Consider these tips:

Consider Your Spending Habits and Goals

Rewards cards run the gamut, offering various benefits from cash back to retirement savings, charity dollars, gas rewards and travel perks. The key (and sometimes, challenge) is figuring out which speaks best to both your current spending habits and goals. If you’re a stay-at-home parent who routinely uses a card to pay for groceries, gas and clothes – and could use some good old cash to help pay the bills each month – you may want to shop around for a cash-back rewards card that gives you a percentage back for every dollar spent in those particular categories.

On the other hand, if you want a card that can help you save on travel, consider a travel rewards card that rewards you for every dollar spent and offers flexible redemption, meaning you can use the points towards any airline with no black out dates, expirations or restrictions. The BankAmericard Travel Rewards Credit Card, for example, provides that and more, allowing cardholders to apply their points to more than just the purchase of airline tickets. You can use them to pay for rental cars, vacation packages, hotels and even baggage fees.

Also See: Debit Versus Credit

For more rewards card profiles, check out Consumer Reports’ updated Rewards Card Buying Guide. There’s also Bankrate’s 2012 Rewards Card Survey.

Weigh the Pros With the Cons

Now that you’ve narrowed down a few possible options the next step to picking the best rewards card involves reading all the fine print. As arduous as that sounds, it will be very important to know what, for example, are the annual fees to opening the card and the possible limitations when trying to accumulate and redeem those points or earn cash back. Does the sum of the pros outweigh the cons? If not, keep looking.

Also See: 6 Things to Keep in Your Wallet

Consider Offers From Your Bank

Finally, don’t forget to review rewards cards offered by your existing bank. The reason is some banks extend even bigger perks to existing customers. For example, you may be able to earn additional bonus points for paying the credit card off using your checking account at the same bank.

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