When you’re shopping for a new credit card, it can be hard to compare offers when it’s rarely an apples-to-apples comparison. That’s especially true when you’re trying to decide between a cash back credit card, a rewards credit card and a low-interest credit card.
The most important thing you can do is to take some time to understand the differences between these card types. That way, you can make an informed decision about which card is best suited to your needs and lifestyle.
We’ve put together a comparison chart and some basic information to help you make the best choice.
Cash Back Credit Cards
The first option you should consider is getting a cash back credit card. These cards offer you a small percentage back based on your purchases within specific spend categories. It can vary depending on what you purchase, but the general idea is that you save money by using the card.
A cash back credit card is most advantageous if you plan on paying your bill in full each month. The usual cash back percentage ranges from 0.5% to 2%, although it’s not uncommon for card issuers to offer a higher percentage in the first three months to entice new applicants.
Using a cash back credit card can be particularly helpful when gas prices or grocery prices increase. Using a credit card to pay for those purchases reduces your expenses.
At Addition Financial, we offer a cash back premier credit card that offers the following options:
- A 3% cash bonus per dollar on gasoline purchases
- A 2% cash bonus per dollar on grocery purchases
- A 1% cash bonus per dollar on all other purchases
We also offer a one-time, $100 cash bonus after the first six months, provided you have charged at least $500 on your new credit card.
Rewards Credit Card
The next type of credit card to consider is a rewards credit card. You might view a cash back credit card as a rewards card, but cash is only one way that a card issuer can reward cardholders for their loyalty.
Most rewards credit cards fall into one of two categories:
- Those that offer points in exchange for spending – the points can then be redeemed at retailers
- Those that offer airline miles in exchange for spending – the miles can then be redeemed for airline tickets
The Addition Financial Visa Premier Credit Card offers these benefits:
- Redeem your points for cash
- Redeem your points for merchandise and gift cards
- Redeem your points in the form of donations to A Gift for Teaching or Kid's House
- Redeem your points (25,000 or more) for travel tickets
People who travel frequently often prefer to use a credit card that rewards them with miles that they can use for additional travel. If you’re not a frequent flier, you may prefer a points card so that you can use the points to get things you want at your favorite retailers. Or, you could accumulate your points for travel tickets and spend them on travel-related gift cards.
As you might expect, card issuers vary the rewards they provide, usually reserving the best rewards for their most loyal and credit-worthy customers. As is the case with cash reward cards, it’s common to offer an incentive to new card members to get them to sign up.
At Addition Financial, we offer a rewards credit card that uses a points system. Here’s how it works:
- 5 points per dollar for certain special purchases
- 3 points per dollar for gas and grocery purchases
- 2 points per dollar for travel purchases
- 1 point per dollar for most other purchases
We’ll also give you a 10,000-point bonus if you charge $1,000 in your first six months with us.
Low Interest Credit Card
The final option to consider is a low interest credit card. These cards don’t offer cash back or rewards, but having one ensures that you won’t end up paying more than you need to in interest and financing charges if you carry a balance.
The main benefit of a low interest card is that it can save you money if you transfer your balances from other cards with high interest. The reduced interest rate can make it easier for you to make your payments and get your finances in order.
The Addition Financial Visa Platinum Low Rate Card offers the following benefits that our cash back and rewards cards do plus an added benefit of no foreign transaction fees:
- No annual fee
- No cash advance fee
- No balance transfer fee
In other words, if you qualify, you can get a low interest card from us. You won’t be charged for transferring additional balances to your new card, and there’s no annual fee to sign up.
The option of having a credit card that gives you something in return for using it is an appealing one. We recommend that you compare the available options, and then click here to apply for the Addition Financial card that best suits your needs.