How to go out with the reward cards

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Sign up at the Whole Foods Market Grocery Store in San Ramon, California, announcing a promotion in which Amazon Prime credit card holders enjoy a 5% discount when shopping at the store on the 27th. February 2018.

And it works. According to TransUnion's latest quarterly report, the number of credit cards issued by consumers aged 18 to 34 has increased by 10% over the same period last year.

However, reward cards, which give out points when you buy from airlines, gas stations and restaurants, are not always as good as they seem.

For starters, these credit cards typically have above-average interest rates to compensate issuers for additional benefits.

The average APR already exceeds 17% – a record – according to CreditCards.com, but the annual interest rate for the Ikea card, for example, is even higher at 21.99%.

Thus, the benefits of using a fancy card are quickly canceled if you carry a monthly balance.

In addition, depending on the amount of your monthly expenses, registration bonuses and other rewards do not always offset the cost of an annual membership fee, which can go up to $ 450 depending on the card, depending on the card. the 2017 WalletHub Credit Card Rewards Report.

On the other hand, do not exclude a card entirely because of fees. Often, these cards have better initial bonuses and higher income rates than no-fee cards. For the big spenders, it is easier to accumulate enough expenses to benefit from the advantages of a rewards card and to compensate the expenses.

But all in all, only a select few even benefit from all the benefits that have rewarded them, according to Ted Rossman, an industry analyst at CreditCards.com.

Just over half of the rewards card holders have traded for cash over the past year and 29% have exchanged gift cards, Bankrate said. Only 13% of cardholders exchanged points for merchandise and less than 10% exchanged for a hotel stay or a free flight ticket.

According to Bankrate, nearly a quarter of cardholders, or 22%, have not exchanged any reward.

That's why cash back is often a better bet, Rossman said, although travel rewards are still considered the best deal because they have greater value for exchange.