Before CardWisdom.com went online, I used my family as guinea pigs to test out some of the website's features. The one feature everyone liked best was the credit card rewards calculator. And nearly everyone who tried it came to the same conclusion: they were using the wrong credit card.
There are tons of reasons why we pull a certain credit card from our wallets. Unfortunately, most of them aren't the right reasons. We may like a card because it has the logo of our favorite sports team (guilty, but it is a debit card) or a picture of our favorite pet (not guilty). However, the key to wise credit card usage is limiting interest expenses and earning the most rewards, preferably cash back rewards.
I've written a lot of articles on the benefits of cash back rewards, so I won't preach on the subject here. All I will say is that if an average person uses a cash back credit card with 1-2% cash back as often as they can, it's very easy to earn $400 to $600 a year. (If you want to find out how much you could earn, test out CardWisdom's credit card rewards calculator).
The reason everyone should be using a cash back credit card is simple: these cards generally have no annual fees and the rewards you earn are straightforward: one to two cents every time you spend a dollar. One of the relatives I converted to cash back had been using a card with an $85 annual fee that earned him points that he didn't know what to do with. When he saw how much he could be earning in cash back, he realized he could save $85 right off the bat and collect something useful every time he used his credit card.
Of course, if you currently have credit card debt, earning cash back rewards shouldn't be your primary concern; you should seek out a 0% APR balance transfer credit card so you can reduce your interest expenses and focus on getting out of credit card debt. (For more on this, see the article Why Pay Credit Card Interest).
However, if you pay all or most of your credit card bill off every month, you should really consider switching to a cash back credit card. This way, you can ditch the annual fee, stop earning useless points, and start earning a little money every time you spend some.
