Rewards can make a credit card feel exciting. Points, cash back, travel redemptions, and gift cards are easy to understand and easy to compare. But rewards are only valuable if they fit the way you actually use your card.
If you carry a balance, the interest you pay can outweigh the value of rewards. The CFPB explains that interest is the cost of borrowing money and that paying all or part of the balance sooner generally reduces the amount of interest paid. (CFPB Credit Cards)
That is why choosing between a rewards card and a low-rate card should start with your habits. On Tap Credit Union offers both: the Summit Visa, described as its classic Visa card with the lowest rate, and the Rewards Visa, which earns reward points for every dollar spent. (On Tap Credit Cards)
Why People Choose Rewards Credit Cards
Rewards cards are popular because they give cardholders something back for spending they may already be doing. Depending on the program, rewards may be redeemed for options such as cash back, travel, gift cards, merchandise, or other benefits.
On Tap’s Rewards Visa earns reward points for every dollar spent. On Tap states that points can be viewed in Online or Mobile Banking or through the Brew Rewards website, and redemption options include cash back, travel, gift cards, merchandise, and more. (On Tap Credit Cards)
Rewards may make sense when you pay your balance in full, avoid unnecessary purchases, and use the card for planned spending rather than impulse spending.
Why People Choose Low-Rate Credit Cards
Low-rate credit cards are designed for a different priority: reducing the cost of borrowing. If you carry a balance, consolidate debt, or want a card that is easier to manage over time, a lower APR may matter more than earning points.
On Tap’s Summit Visa is described as its classic Visa card with the lowest rate. Both On Tap credit card options include no annual fee, no balance transfer fee, no cash advance fee, low rates, fraud protection, and digital wallet compatibility. (On Tap Credit Cards)
When Rewards Make More Sense
A rewards credit card may be a good fit if you pay your balance in full each month, already have a budget, track spending regularly, and want to earn points on purchases you would have made anyway.
The key is not spending more just to earn rewards. If earning points encourages extra purchases or leads to a carried balance, the cost of interest can reduce or erase the value of those rewards. (CFPB Credit Cards)
When a Low Interest Rate Makes More Sense
A low-rate credit card may be the better option if you tend to carry a balance, are paying down higher-interest debt, want a simpler card, or prefer fewer fees and a lower ongoing borrowing cost.
The CFPB notes that the sooner you pay all or part of a balance, the less interest you pay. Pairing that habit with a lower-rate card can help make repayment more manageable. (CFPB Credit Cards)
The Hidden Cost of Chasing Rewards
Rewards can be useful, but they should not be the only deciding factor. A card with rewards may still have an APR, fees, or terms that make it a poor fit for someone who carries a balance.
Before choosing a card, compare the total picture: APR, annual fee, balance transfer fee, cash advance fee, rewards structure, fraud protection, digital wallet access, and whether the card supports your real spending behavior.
Questions to Ask Before Choosing a Card
- Will I pay off the balance in full each month?
- Am I trying to pay down existing credit card debt?
- Would rewards encourage me to spend more than planned?
- Do I care more about earning points or lowering potential interest costs?
- Are fees, security tools, digital wallet access, and local service important to me?
- Do I want a simple low-rate card or a rewards card with flexible redemption options?
For On Tap members, the choice may come down to Summit Visa for the lowest-rate classic option or Rewards Visa for points on purchases, with both options keeping fees simple and offering fraud protection. (On Tap Credit Cards)
Frequently Asked Questions
Are credit card rewards worth it?
Credit card rewards can be worth it if you pay your balance in full, avoid unnecessary spending, and use rewards on purchases you would have made anyway.
Is cash back better than a low APR?
Cash back or rewards may be better for someone who pays in full every month, while a low APR may be more valuable for someone who carries a balance or wants to reduce borrowing costs.
What type of credit card is best if I carry a balance?
If you carry a balance, a lower-rate credit card may be more useful than a rewards card because interest costs can outweigh the value of rewards.
What is the difference between On Tap’s Summit Visa and Rewards Visa?
The Summit Visa is On Tap’s classic Visa card with the lowest rate. The Rewards Visa earns reward points for every dollar spent.
Should I choose a rewards card or a low-rate card?
Choose based on your habits. If you pay in full and want points, a rewards card may fit. If you carry a balance or want lower borrowing costs, a low-rate card may be better.