Rewards Credit Cards vs Cards with No Rewards
Let’s take a look at the major differences between rewards credit cards, and credit cards that don’t have any rewards.
It appears that rewards credit card companies are relying on interest rates and annual fees to compensate for the rewards they provide. If you take a look at the default interest rate of most credit cards without any rewards, you will see that they are much lower than those with rewards. Also, you shouldn’t expect an annual fee, on a typical credit card.
Comparison of two popular credit cards from each category, one without rewards, and one with rewards. We will break down the major differences between these cards. (Continued below)
As you can see, the first two cards (U.S. Bank & Discover) have default interest rates starting at 9.9%, and 10.99%. The cards with rewards have interest rates that start at 14.99% and 15.99%. You also see that there is an annual fee for both rewards credit cards, although the first credit card listed as the fee waved. In addition to the low default interest rate on the credit cards without rewards, they also feature a 0% introductory APR on balance transfers and purchases as another perk.
Rewards credit cards don’t have to be the bad guy
Looking at the obvious differences, rewards credit cards can still be rewarding. Watch the annual fee, you want to make sure that your rewards are worth more than what you pay each year in annual fees. Also if you’re going to use your credit card make sure you pay it off every month, that way you won’t incur any interest charges, then the interest-rate won’t affect you whatsoever.