With the holidays fast approaching, gifts are on our minds. After all, Thanksgiving is a holiday based on giving, and like it or not, presents are a major highlight of many people’s Hanukkah and Christmas celebrations. This should come as no surprise, however, because people inherently love gifts. They’re mysterious, fun and, most importantly, free.
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Such psychological basis for gift appreciation also founds the popularity of rewards credit cards. People are enamored with the idea of receiving bonuses for doing what they would normally do, and extra money and goods always seem to be worth more. However, as is the case with giving gifts to a significant other or child, people often don’t give themselves the right thing in terms of rewards credit cards. In fact, there are various types of rewards credit cards, each serving specific purposes and appropriate for certain lifestyles.
First, it is important to note that rewards credit cards are only for people with good credit. Getting one when you have credit improvement needs or do not pay your credit card bill in full each month is like giving a child underperforming in school an Xbox. It distracts from more important needs and provides an overall disservice.
In addition, those with good credit have certain important considerations in giving themselves the best rewards credit card possible. While travel rewards cards are popular, you must ask yourself: ‘do I travel enough to warrant such a card?’ After all, some gifts seem great at first but go unused and are ultimately forgotten.
If you accumulate at least 30,000 miles with the same airline or 20 nights at the same hotel chain each year, you can’t do better than giving yourself an airplane or hotel rewards card tied to your particular company of choice. Frequency of travel and brand loyalty in logistics are crucial factors, however, because of the dynamics of these types of cards. Airline and hotel credit cards confer great benefits—such as free flights and stays, VIP access and preferred status—but also give issuers the ability to change the points or miles benchmarks that trigger them.
Such plateau shifts, in effect, devalue already earned points and miles. However, by traveling often while using the same accommodations, you are able to redeem rewards frequently, thereby leaving yourself with the least amount of miles and points to be devalued at anytime. Additionally, if some points or miles do get devalued, you will likely have already received a great deal of benefit from your card, thereby lessening the sting of the loss.
Frequenting different airlines and hotels does not mean that you are destined to get a lump of coal in your stocking, however. There are still great rewards credit card options available to you. The Capital One® Venture Rewards Credit Card is an excellent present for the frequent traveler who practices logistical variety. If used correctly, this card essentially serves as a 2 percent cash-back card whose rewards can be redeemed through any travel agency or travel-related website.
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However, we all know those people who prefer to simply receive money for birthdays and holidays. This allows them the freedom to buy whatever they want and not get saddled with unwanted gifts. These consumers are in luck when it comes to rewards credit cards because cash back credit cards are right up their alley.
Like cash gifts, cash back rewards cards represent the least risky option available because there are no surprises; you know what you’re getting with them. Cash cannot be devalued or restricted, is constantly earned, and is accepted anywhere, for the purchase of anything. So if you don’t travel often or just want rewards flexibility you can’t go wrong giving yourself a cash back rewards card like the Bank of America Accelerated Cash Rewards American Express Credit Card, which offers 1.25 percent cash back on all purchases, or the Chase Freedom, which offers $100 after you make $799 in purchases in your first three months as well as 5 percent quarterly bonus categories and 1 percent cash back on all other purchases.
During this holiday season, think not only of others but also of yourself. Give yourself the present of a rewards credit card because it truly will be the gift that keeps on giving. Plus, you can even use it to help lower the cost of the gifts you give others!
Odysseas Papadimitriou is CEO and Founder of CardHub.com, an online marketplace for credit card applications.