finding rewards

As I was discussing in my last post about Credit Cards, rewards can make credit cards a useful tool. You just need to make sure that you don't get carried away. In the past, we have often tried to spend only cash for our expenditures, as away to try and curb spending and make our expenses feel more "real" to us (thereby helping us to equate the cost with the time spent to earn that amount of cash). However, with the rewards programs that are out there, it is difficult to argue with getting a few nights of free hotel stays, or some free airline flights, or even cash back at the end of the year, in return for the additional hassle of a monthly credit card bill.

Assuming that you pay off your balance each month, there's really no negative effect of using this strategy. Creditors actually prefer that you spend money and pay off credit cards, rather than just letting them sit in your wallet unused.

Finding the best reward program is fairly simple. There are lots of pages that give some advice on choosing a reward program. Many companies will even give you the option of changing your rewards preferences midstream. For example, you might want to save up miles for a free airline flight, but then change it to free gifts or cash back after your vacation. many offer this option without any penalties. The best rewards programs out there, in my opinion, offer this sort of flexibility, and also offer most of their rewards without blackout dates or expiration limitations.

Obviously, considering the percentage rates is also an important option if you plan on carrying a balance (or even if you don't plan on it - sometimes you just cannot help it!). I generally try to keep cards that hover at less than 10 percent, but this has been getting difficult lately. Plus, most of the fine print includes a line stating that they can still change your rate whenever they feel like it, so the idea of a true "fixed" rate doesn't really exist from what I can tell. Your bets bet is to have at least two credit cards, and use one as a backup that you can transfer a balance to if the first card tries to up your rates. Here's an interesting article on transferring balances and keeping them at a 0% APR year after year.

In the old days, you could usually call the credit card company up, threaten to transfer the balance and cancel the card and they would knock some of the interest rates down. These days, they don't do that, though. I remember calling Citibank once and the guy was extremely rude to me, actually. He just said, "Go ahead." I should have reported him to his boss, but they probably wouldn't care anyways.

In a nutshell, it is important to remember that a credit card is a tool that is not to be taken for granted or depended upon. It's great to have for emergencies, but don't depend on any APR promises. All they need to do is say that they missed one of your payments or that it came in late, and they can increase your APR for whatever they would like. Remember: Your best defense against crappy credit card companies is the money in the bank to pay them off.