No longer are credit cards just another source of funds.  Generous and diverse reward programs are now a major consideration factor in applying for a credit card.  However, are these reward programs actually beneficial? 

A reward credit card will provide points every time a cardholder uses the card.  In turn, these points can be exchanged discounts, airline flights, or even cash.   

Though the benefits may seem attractive, most reward based credit cards do not come with competitive interest rates.  High interest rates may offset any value the rewards given and is the fundamental problem with reward cards. 

Head of banking at moneysupermarket.com, Kevin Mountford commented, "Anyone going down the rewards route needs to understand that interest rates on these cards can be quite high, so customers unable to repay their debt in full each month should consider an alternative product, as any interest charged will always negate the value of the rewards, even on the most generous schemes." 

Another bit of advice comes from Chris Griffiths who is the head of credit cards at Confused.com.  Chris says, "Using a reward based credit card to pay for everyday essentials, instead of a debit card, offers consumers a way to earn some rewards from using their credit card. However, customers should consider how and where they will use the card to maximize the benefits offered and which type of reward will suit them best." 

Generally, reward cards should only be considered and used by those individuals who can pay off their balances every month.  To take full advantage of these reward programs, it may be ideal to concentrate all their spending onto a single credit card account.  Scattering transactions among different cards will result in a longer time before enough points can be accumulated to get something meaningful.  

Andrew Hagger at Moneynet.co.uk said it best when he added, "You are never going to earn a life changing amount from rewards or cash back cards, but if you always clear your card statement every month without fail, then it makes sense to get something back in return for your custom."