Credit card rewards programs offer card rewards such as cash-back, points, and travel miles for every purchase you make with your card. The idea is you will earn specific points for every dollar you spend. You can then use those points and redeem them for rewards. 

Here are key things to remember when choosing a credit card rewards program:

• Cash-back, points, and travel miles:
  When you make purchases using your credit card, you accumulate rewards such as cash-back, points, and travel miles.
  
  A cash-back reward system allows you to earn cash as a percentage of your purchases. With points and miles you can redeem points and miles for travel-related expenses like flights, hotels, and rental cars

• Reward Tiers and Bonuses:
  Different types of transactions may earn different rewards. For example, some cards offer higher rewards for specific categories like dining, travel, groceries, or gas.
  
  Some cards also allow you to earn more by spending more. You can earn bonuses when you spend a certain amount within a certain time frame. 
  
  
• Redemption:
  Credit card rewards programs offer multiple ways to redeem your earned rewards, such as through gift cards, merchandise, airline flights, hotels, and loyalty programs.
  
  Cash back programs allow you to redeem your cash in various ways, such as paying for the balance of your credit card or sending a direct deposit to your bank. 
  
  
• Annual Fees:
  Some credit cards offer additional benefits such as access to airport lounges, travel credits, insurance coverage, and more. These perks sometimes come with annual fees.
  
  
• Expiration and Restrictions:
  Some rewards, such as points and miles earned with airline and hotel loyalty programs, may expire after a certain time. Certain cards also restrict how and where you can use your rewards.

Remember that while credit card rewards can be valuable, responsible credit card usage is paramount to achieving FIRE. Always prioritize paying your balance on time to avoid high interest and fees that could negate the benefits of the rewards you’ve earned.

APR stands for Annual Percentage Rate, which is the yearly cost of borrowing money and carrying a balance on your credit card.

Credit cards express their interest rate on an annual basis, which is usually between 15% and 30%. The APR is not the interest you would pay monthly on your balance. To calculate the monthly interest rate you pay for carrying over a balance, you must divide your APR by 365 days. This will give you the daily interest rate. Finally, multiply your daily interest rate by the total number of days in the billing.

For example, if you have an APR of 26%, your daily interest rate is 0.07% (26% / 365 days). Your monthly interest for June would be 2.14% (0.07% x 30 days). So if you had a balance of $1,000 at the end of month one, you would pay $2.14 in interest, and your balance at the start of month two would be $102.14

Interest on your credit cards is calculated at the end of each month and added to your balance. If you pay your credit card balance before the end of each month, you will not accrue any interest on your balance.

While all credit cards seem the same, you should consider some important features before applying or deciding which credit card is best for you. 

• APR: The annual percentage rate is the interest you pay on your credit card. Most credit cards offer a variable interest rate. But it’s important to know the potential APR range of the credit cards you are considering. Ideally, you want a credit card with the lowest APR, especially if you intend to carry a balance month-over-month on your card. 

• Annual Fee: The annual fee is the yearly cost of using your credit card. Many credit cards have no annual fee, but credit cards with more perks and higher reward rates, like premium credit cards, often have an annual fee. Certain luxury and premium credit cards can have an annual fee of $500. 

• Recommended Credit Score: Your credit score is a factor credit card issuers consider before approving you for a specific credit card. While many factors determine whether you get approved for a credit card, falling within the recommended score range increases your chances of getting approved. 

• Rewards Rates: These are the rewards your card issuer will give you for using the card. You want to choose a credit card with rewards that align with your spending habits and goals. For example, if you are an individual and you want cash-back, you should consider a cash-back card with multiple categories to maximize your rewards. If you want to travel, a travel rewards card that allows you to use your rewards for travel-related expenses might be a better option. 

• Intro Offer: This is a bonus offer to new cardholders. The intro offer is an additional reward new cardholders can earn if they meet certain criteria determined by the card issuer. For example, a common structure for an intro bonus offer is you earn  $x in cash back if you spend $x within the first x months. These offers will vary depending on the car issuer, but an intro offer is a bonus reward that new cardholders can receive in addition to the standard rewards rates offered for using the card. 

• Intro APR: The intro APR is a special APR offered to new cardholders after they sign up for a credit card. The standard intro APR offer is 0% APR for a fixed period after you open your credit cards. The intro APR period can range from 6 months to 24 months. Credit cards will have a 0% APR during this period, but after the intro APR period, the APR will return to its original rates. 

• Additional Fees: Depending on how you use your credit cards, you should be aware of additional fees you incur. This includes balance transfer fees, foreign transaction fees, late fees, and cash advance fees. You will have to pay these fees if you perform a specific action. For example, a foreign transaction is a fee that your card issuer charges on transactions outside of the U.S. Below; we will go into more detail about credit cards’ different fees. 

With any financial institution, you must be aware of fees when you hold a credit card. 

• Annual Fee: An annual fee is paid by the car issuer every year for holding the card. Premium or luxury credit cards will have an annual fee; higher reward rates and better perks usually accompany this. Many cards today don’t have any annual fees and are free to hold but commonly have lower rewards rates and fewer perks. 

• Foreign Transaction Fee: This is a fee you must pay on any purchase or transaction made outside of the U.S. It’s important to research this fee before deciding to go on any international trip. While some cards designed for individuals who travel often will have a 0% transaction fee, it’s not uncommon for most standard credit cards to have a foreign transaction fee of around 3%. 

• Balance Transfer Fee: A balance transfer fee is a fee that must be paid whenever an outstanding credit card balance is transferred to another credit card. This fee is typically anywhere from 3% to 5% of the transferred balance. Most credit cards will also have a minimum balance transfer fee that must be paid on all transfers, such as $5 or $10. Individuals commonly use balance transfers to transfer a balance to another account, especially when the 0% APR period is ending for a credit card. 

• Cash Advance Fee: The cash advance fee is the fee you will pay whenever you decide to use your line of credit to get cash. Cash advance fees vary depending on the credit card issuers and can be a fixed fee or a percentage of the cash advance amount. Another thing to consider is that cash advances incur a higher interest rate than the rest of a credit card balance. 
  
  
• APR: The APR is the interest rate you will pay on your credit card. APR is expressed on an annual basis. The interest on your credit cards is calculated at the end of the month based on the balance you are carrying over to the next month. It’s also important to note that APR is an annual rate. You must first divide your APR by 365 to calculate your monthly rate. This will give you your daily rate; then, you multiply it by the total number of days in the month. This will give you your monthly interest rate. For example, if you have an APR of 24%, your daily interest rate would be 0.066%. Your monthly interest rate for June would be 1.97%. This is the amount you would pay each month on any carryover balance.