While researching for credit cards you might have come across the various types of credit cards. Among them, one type is the rewards credit card. This may have left you overwhelmed with so many choices and which type will be the best to go for. In this article we have covered everything about the reward points-based credit cards, how they work, how can you use them to your advantage, and their pros and cons. Keep reading to kick start your research.

What is a reward credit card and how do they work?

Rewards credit cards are those credit cards whose incentives revolve around the reward points. The reward points can be earned either on all categories or on selected categories. You need to read the rewards program of your credit card to know which transactions can let you earn reward points.

You get to earn reward points every time you use your credit card to make a purchase. These reward points are accumulated on your credit card which you can further redeem against product purchases, DTH/Recharge, vouchers, booking flights/hotels, etc. SBI SimplyCLICK Credit Card is one of the most popular rewards credit cards available in India that you can consider applying for.

Pros of having a reward credit card:

Given below are the pros of having a rewards credit card:

  • They help in building a good credit history.
  • On all or selected spend categories you earn reward points.
  • Reward points are flexible and can be redeemed for the desired products or services.
  • Rewards credit cards range from entry-level to super-premium credit cards so you can easily find the right match for you.

Cons of having a reward credit card:

Before applying for a rewards credit card you must know the demerits as well so that you can make an informed decision.

  • If they are not handled with care then you can easily land into a debt trap.
  • Depending on the credit card you might only earn limited reward points.
  • Reward points come with an expiry date, if you do not redeem them before they expire then you will lose the chance of maximizing the benefits of your credit card.
  • They also impact your credit score negatively if you do not clear the credit card dues on time.

Bottom Line:

To conclude, is it worth having a rewards credit card? Yes, it does, as you get to earn reward points on your purchases that you can use for further shopping. To apply for a rewards credit card you need to first make sure that you have selected the right credit card. You need to identify your needs and spending habits and then compare credit cards on different factors in order to find out the right credit card.

To make the most out of your rewards credit card you need to keep certain things in your mind like adhering to the timely credit card bill payments and maintaining a low credit utilisation ratio. Using a credit card wisely is the only way to build a good standing account.

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