Reward Credit Cards

If you're unable to pay the balance in full each month, the interest you will pay will likely wipe out your reward gains. This is also true if you exceed your credit limit (as you'll likely pay charges).

If you're unable to repay the balance in full each month, a 0% spending credit card may be a better option. These cards usually have a lower interest rate.

Rewards, for the most part, can be split into two types:

• Cashback: for every dollar spent, you get a certain amount back. Depending on the card, this could be paid back to you monthly or annually. Some cards may even have a minimum spend to receive any cashback.
• Points: you can earn vouchers or flights as an example, but it's important to understand what a point is worth. You may find that one point is worth anything between 1 and 5 cents. Find out before making a card application.

Retailers often have offers to boost the points you receive if using a rewards card. Canadian Tire for example, provide points boosts using their Triangle Rewards app to activate offers. So it's possible to boost your reward earnings.

With a reward credit card, each time you use it, you more often than not get paid. So it would be better to use the reward card instead of a debit or other credit card.

Note that this isn't an excuse to spend more or excessively though!

If you use this card on everyday spending whilst paying off the full balance each month, you can earn some very nice rewards.

If you need to borrow money, it may be better looking into a card with lower interest rates. A 0% spending card or balance transfer card are viable options.

Withdrawing cash using a credit card as a general rule of thumb is not a good idea. You'll more than likely incur a fee and interest (at a high rate) from the day the money was withdrawn until the balance is paid in full.

You can have as many reward cards as you are approved for. Be aware though, each new card application will have an impact on your credit score. If you already have a couple of cards, it is unlikely you'll be approved for another.

If you spend frequently at a specific store, then it could be worthwhile. Some cards have a double or bonus points offer where you could earn more points at a specific store and boost your earnings.

The best way to answer this is to understand what you value in rewards. If you prefer cashback, then a card that offers good percentages on spending and pays you frequently (monthly for example) may be best. If you prefer points (converting to vouchers or air miles for example), then a card with a generous loyalty program would be best.

Remember you still need to be approved for the card, and so it's best to understand your credit score first before applying. This will help you determine which card is likely to approve you and meet your needs.

Card companies make money through the interest their customers will pay.

With a rewards card, they will also make money from the retailer. When you pay using the rewards card, your card provider will receive a small amount from the retailer.