For those readers who are self disciplined, rewards credit cards can be used to their advantage. When such individuals are shopping for a new credit card, they should get one that rewards them for utilizing it. Then, they would be wise to use it for absolutely everything that they possibly can, while paying off the balance every month. Ten helpful tips for using rewards credit cards follow below.
1. Reward Cards Only Reward People for Not Carrying a Balance
Because rewards credit cards typically come with higher interest rates than credit cards without rewards, the only way to efficiently and effectively utilize them to your advantage is to pay them off in full every month. If you carry the balance month in and month out, you’ll end up more in interest charges than you make in rewards cash and prizes. By paying off the bill every month, you make the reward card work for you, instead of the other way around.
2. Higher Levels of Spending Give Greater Rewards
Most credit cards feature the clause “rewards up to” some percent, which in reality translates to them usually paying lower rewards than the stated up to percentage rate. Only once you hit a higher volume of spending per month will the full percentage actually kick in.
3. Be Aware of What the Rewards Cost
There is always a cost in points to get a reward and sometimes these turn out to be not so rewarding. For example, if a you are required to spend more than $10,000 in a single year in order to attain a $50 gift card, then the reward is hardly worth the effort required in terms of managing your account. And there’s always the likelihood that in that $10,000 spend are various useless items, which are nothing more than a waste of money.
4. Frequent Flyer Rewards Require Many Significant Dollar Purchases
Frequent flyer schemes are terrific reward programs, but mostly only for those who actually charge large dollar amounts frequently on their credit cards. For someone who doesn’t use their credit card frequently, you could be waiting a long time before you reach the qualifying level for a single free flight reward. If you only charge things occasionally you are better served to find a credit card that rewards for lower spending levels with cash back or shopping vouchers.
5. Filling Stations Give Extra Generous Reward Points
Fuel reward credit cards have grown massively in popularity as a result of the higher price of fuel. These cards can prove to be inordinately generous – many of them even offer five percent cash back on every purchase! This typically covers any purchase made inside of their convenience stores, as well.
6. Rewards Cards with Annual Fees are Not Rewarding
There is little point to a rewards credit card that features an annual fee, especially a hefty one! Anyone who is made to pay a $30 membership fee per year will likely need to spend fully $3,000 before being able to achieve a reward. The only case where annual fee reward cards still make sense are when eiher double frequent flyer miles or double points are on offer.
7. Understand That Rewards Have Limits
Most cards feature maximum earnings on their reward programs for a year – this really matters and is something you need to be aware of. For a fuel reward credit card that pays a generous five percent cash back but then cuts it off after $300 in purchases, the rewards potential is significantly limited.
8. Use Reward Credit Cards to Pay Bills
A faster way to build up rewards is to use your card to pay off any outstanding household bills or business expenses. Using a rewards card in this manner can quickly generate substantial amounts of rewards in a relatively short amount of time.
9. Understanding the Difference Between Pleasure Points and Cash Back
Points that credit cards give members to use for the purchase of shopping, travel, or restaurants are not cash back – these could be called pleasure points. The most important thing in choosing a rewards card to earn such ‘pleasure points’ lies in getting one that offers rewards you will actually use. Earning points for a particular chain of shops isn’t much good when they don’t have any stores anywhere near where you live.
10. Never Let Rewards Expire Unused
As silly as this sounds, it happens all of the time. Most rewards credit cards come with some fine print about expiration dates. They keep this quiet in the hope that you will simply not redeem your points before the deadline arrives. Find out what this expiration date is, be it a year or two years, and then mark your calendar!