A reward credit card is like a Kinder Surprise chocolate egg for adults. No matter how you enjoy the product itself, you are looking forward to getting a prize. With reward cards customers first of all look at costs. Banks have responded and now they are offering rewards cards with no annual fee.

Not everyone is eligible for such cards. It has been estimated that only 30% or rewards cardholders have such a card. These cards are targeted at customers with good or excellent credit score. These are prime and super-prime customers. So, competition among banks operating in this segment is very high.

When people make such online many have in mind that they will get something for nothing. That is not true. Even a no-fee card is not necessarily free. What concerns no annual fee rewards cards, either merchant pays in the form of discounts or a cardholder in penalty fees and finance charges. For example, interest rates on these cards are usually 1% higher.

Anyway, banks that offer revolving products hope that customers will charge their cards as much as possible. And they do. According to Bank One senior vice president there are two types of cardholders. ?Spenders?, who use actively their card and pay off the whole balance each month. And ?Blenders? who keep a revolving balance. ?Spenders? use such card in the right way. This means if you really want a no-fee reward credit card you have to commit to discipline.

Before you apply for a credit card online ask yourself several questions:

?What happens to your points if you are late with a payment? Some banks will deprive you of your points or freeze them until you pay a penalty fee.

?Which rewards programs suit you best? Decide what makes sense for you. Do not waste your time and money on unachievable things.

?How do you get your rewards? Be specific. Find out how long you shall wait until you can redeem your points. Do you have to participate in a program a certain period of time or earn a minimum number of points? Do your reward points expire?

?Is there a possibility to maximize your rewards? Sometimes if you spend your points with one of the bank's business partners you will be given additional points.

?Is there a reward cap? Some issuers will pay the rewards only to a certain amount. If you wish to accumulate them further you should better switch to another card.

?Will this program be around when you are ready to claim it? My sister once accumulated the necessary amount of points for an African safari. And when she was ready to claim it, it was not in the catalogue! Instead she went to Paris.

Well, if your credit card has no annual fee, you borrow money at a very reasonable interest and on top of that you get rich rewards, that means you save a lot! But do not expect this El Dorado to last forever.