Choosing a credit card that offers rewards can save money and offer many benefits, if the user knows what card to select and how to take advantage of its perks. There’s no universal rewards credit card that is best for everyone, though. Benefits depend on how a customer spends money from day to day and what types of rewards are most valuable to them.

U.S. News found that 44% of people fail to research their credit card benefits and rates before applying for them. Without adequate research and comparison, they risk missing a key opportunity to save money. To choose a card with maximum benefits, you should first research the fees as well as the perks associated with various rewards programs.

Types of Rewards

There are two basic types of rewards that credit cards can offer: cash back rewards and travel rewards, sometimes called points rewards. Understanding the basics of each can help you choose which type of program suites your habits and lifestyle best.

Cash Back Rewards

With cash back rewards, credit card holders receive money back for a certain percentage of every dollar they spend. Sometimes this is a flat rate, applied evenly to all types of transactions. With other programs, the rate depends on the category of goods and services. For example, there will be different rates applied to groceries, gas, and restaurant purchases.

Another thing to find out is the cash back policy. Some programs only give cash back up to a certain amount spent. Furthermore, while some programs give cash back, others only credit your account for future purchases.

Travel Rewards

Travel rewards programs keep track of money spent in terms of points or miles. These points can then be applied to travel expenses. Some credit cards track flights separately from other expenses while others group travel expenses all together so that miles apply to flights as well as hotels.

With airline rewards, customers can earn miles for every dollar they spend. These miles can then be applied toward future flight expenses and upgrades.

There are also other types of travel rewards that cover more costs than flight expenses. For example, some can be used at hotels for free nights and room upgrades.

Differentiating Between Programs

Beyond types of rewards, credit cards also offer different fees and perks for using the card. The program that’s right for you will depend on how much you plan to use the card as well as what perks are most relevant to your lifestyle.

Sign-Up Bonuses

Check with your bank about what bonuses they offer for first time sign ups. It’s worth comparing this initial perk between cards when you’re looking to apply.

Annual Fees

Annual fees vary quite a bit between cards. While you might be tempted to pick a card with low or no annual fees, keep in mind that higher fees mean more benefits. Be realistic beforehand about how often you’ll use the card. This will help you determine what extra benefits are worthwhile compared to the higher fee.

Card Perks

Besides points and cash back, many credit cards also offer a set of perks. First Western Trust, for example, offer exclusive airport lounge access worldwide and no foreign transaction fees with their Visa Signature Elite and Premier American Express cards. If you travel abroad frequently, reward card perks like these pay off in the long run.

Making the Most of Rewards

Rewards credit cards save money and provide value to your life if you know how to make the most of them. On the other hand, they can end up costing you money if you don’t pay them off or use them enough. Here are a few tips to keep in mind to make applying for a rewards card worthwhile.

• Maintain a good credit score. Most companies won’t even let you apply for credit rewards unless you have good to excellent credit. Either way, you’ll have to maintain good credit to keep using your rewards.
• Pay your credit card balance in full. Rewards cards usually have higher annual percentage rates. Therefore, it’s especially important that your pay off these cards so that high interest rates don’t counteract your reward benefits.
• Think about your lifestyle before choosing a card. You’ll have to meet the minimum spending requirements to earn rewards and make the card worthwhile, so make sure the card you pick makes sense for your spending habits. You can start earning rewards right away with cash back card if you use the card for everyday purchases such as gas and groceries. But if you don’t like to put those types of purchases on credit, then maybe cash back rewards is not the program for you. Similarly, if you rarely fly, it will take years to rack up any worthwhile amount of travel points, so maybe consider another program instead.
• Consider a co-branded card if you frequent certain stores, airlines, or hotels more than others. These can offer unique perks that generic rewards cards don’t.

The benefits and rates of rewards credit cards are as unique and varied as the people applying for them. Take the time to find which program is right for your spending habits. The extra research will pay off in the long term with perks and savings that fit your lifestyle.