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If bonuses or categories of rewards traditionally offered by your credit cards, such as shopping, fuel travel or dining, do not match with your spending, then you might be better off with a credit card that offers customisable reward. Image Credit: Pexels/Kindel Media

Dubai: If you’re making use of multiple credit cards for different bonuses and cashbacks, wouldn’t you be better off with a single credit card that offers rewards that can be customised? But before choosing such a card, UAE experts weigh on how it’s worth first looking at how you spend.

“If bonuses or categories of rewards traditionally offered by your credit cards, such as shopping, fuel travel or dining, do not match with your spending, then you might be better off with a credit card that offers customisable rewards,” said Essam Kabeelali, an Abu Dhabi-based credit advisor.

“With these cards, the bonus categories shift according to your own spending habits. But not all credit cards offer such rewards, so check with your bank or credit card issuer to see if they offer customisable rewards. Also, even if they do, bear in mind that your options may be limited.”

Are customisable rewards cards worth the additional cost?

Rewards credit cards are worth the cost in most cases — as long as you're not carrying a balance on which you will have to pay interest, and the annual fee (if the card charges one) is less than the value of the rewards you earn each year.

“While many rewards credit cards don’t charge an annual fee, the best rewards cards may charge an annual fee or require you to have good or excellent credit,” explained Rajesh Markara, another Abu Dhabi-based debt advisor.

“Also, a blanket rule is that you must redeem your rewards to save money, and credit card users are widely cautioned to bear in mind that some redemption options give you less value for your rewards. So check the ‘redemption rates’ in the terms before you sign up.”


What are credit card reward ‘redemption rates’?
Rewards rates will vary depending on the particular credit card you're using, but generally rewards are worth around 1 fil per point. If you earn 1,000 points, that would be worth around Dh10.

You can calculate the rewards value by dividing the amount of rewards by the redemption value. You can usually get this information from your credit card issuer's rewards portal.

How to decide if you need a customisable rewards credit card?

The questions to ask if you’re looking for customisable credit card rewards is to ask yourself if you’re looking for a card that provides the same earning rate, no matter the purchase? Or, would you rather have a card that offers bonus points on purchases you spend the most on?

“As a relatively new concept to the world of rewards credit cards, with customisable credit cards, the earning rates are tailored to you and your spending habits by offering bonus points that are mostly dependent on how you spend,” added Kabeelali. “But there are other factors to consider.

“If you like cashback cards, consider the credit cards you already have, and check whether a customised cash card’s spending categories improve upon the rewards you’re already earning, or do you have other options that could meet or exceed those returns?”

However, while you can earn cashback points or miles on every purchase, and there are a lot of different cards and rewards programs to choose from, remember that you may be tempted to spend more than you can afford in order to max out your rewards or sign-up bonuses.

Pursuing rewards can lead to overspending
For every credit card user, multiple studies conducted by top credit card issuers worldwide have indicated that a 1 per cent cashback program roughly yielded a $25 (Dh90) reward each month and, on average, raises spending by $68 (Dh250) a month and credit card debt by $115 (Dh420) a month.

“As average credit card now comes with an annual interest rate of over 17 per cent, so when trying to earn 1 per cent to 3 per cent cashback while also paying over 17 per cent in interest, the math just doesn’t add up,” added Markara.

“There is no amount of rewards that makes up for interest charges incurred from leaving a balance on your credit cards. You must pay off your balance each month to truly get any benefit from rewards credit cards.”

Maximise cashback with customisable rewards credit card

A common mistake made by credit card users who make use of cashback perks, according to Markara and Kabeelali, is assuming they need to start spending more money to get more perks. “If you’re looking to buy in order to inflate spending, this is the wrong approach,” Kabeelali added.

“Many cashback credit cards offer a welcome bonus if you spend a certain amount within a specific time frame. However, as long as you’re not overspending to reach it, it’s a good way to push your cashback earnings even higher.”

It does help to make large purchases with the cashback credit card instead of cash or debit, the key here is to only do this if you have the cash on hand to buy these items and were going to do so anyway, suggests Markara.

Key takeaways

Rewards cards can appeal to just about anyone. For instance, with cashback cards, you are rewarded by refunding usually around 2 per cent of all your spending. So spending Dh2,000 on your cashback card will net you Dh40 at the end of the month.

Credit card rewards are cardholders’ preferred loyalty perk, according to finance site A recent study found that about two-thirds of cardholders list rewards as a reason for getting credit cards in the first place. But the decision to customise your rewards often boils down to your spending.

So the bottom line is that while a customisable rewards credit card can make a rewarding addition to your wallet, use it for purchases you make regularly to maximise credit card rewards, and avoid overspending and carrying a balance to get the most from your card.