Clark Howard's Tips

Beware of fine print on reward cards

October 8, 2007

Look out for the advertised "deals" on reward cards: Clark saw one in a retail store. He opened the brochure and flipped to the "mice-type" in the rewards section. The 2% reward turned out to be only .5%! You only got 2% if you shopped at that store and ran a credit balance.

It's not that all rewards cards are a bear trap, but there are enough duds out there that you just can't trust them without really looking over all the asterisks.

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You have to be very savvy to even make airline reward cards work. You have to be doing a substantial amount of flying on the airline and charging on the card to get your rewards. And even so, the company might cap the amount of miles you can earn per year, or they may suddenly change the rewards on those cards!

Look out for three things: (1) be wary of annual fees; (2) be aware of fake reward levels (like the 2% "deal" above) (3) these cards have awful interest rates.

For people with money, itŐs hard to beat the deal from emigrantdirect.com! They have a deal where you put money into their savings account, and you get a MasterCard that earns 1.4% But you have to maintain $10,000 in the account.

Other good deals include the CostCo "True Rewards" card: No annual fee, 1% back on all purchases, 2% on all travel, 3% on all restaurants. It's pretty simple and clear, but you must pay your balance in full each month to avoid high interest rates!

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