Tiny Details

The best part about credit cards is that they help you build and maintain a good credit score. The second best part? That might just be the rewards programs. Because a card’s benefits are only as good as your understanding of them, it behooves you to read the fine print.

One thing you should watch out for with credit card reward programs is a cap on cash back spending. For example, let’s say you have a card that offers five percent cash back when you use the card for groceries. That’s a great reward if you spend a lot on groceries each month. However, if the card issuer caps the benefit, that can make a big difference. As USA Today reports, let’s say you spend $15,000 per year on groceries, and have a card that offers two percent back on the entire amount. At the end of the year, you’d get $300 back on that grocery spending. Pretty good! Now, consider if you have a card that offers a tempting five percent back on grocery spending, but once you hit $2,500, the cash back reward drops to one percent. If you still spend $15,000 on groceries, you’ll only end up with $250 total cash back.

As you can tell, the better card here is the one that offers two percent back on the entire amount of spending. However, chances are you wouldn’t know that if you forgot to read the card’s fine print. If you don’t mind using multiple cards, you can use one card up to its reward cap, then switch to another card. If you’d rather use one card, make sure it’s one that you can reap the most benefits. No matter what strategy you take, read the fine print. It will pay off. Literally.