A Rewards Credit Card Can Increase Your Buying Power
How To Optimize Your Rewards Credit Card
For years, credit cards that pay you for choosing them have been increasing in popularity. But many consumers do not optimize such programs. Following are some tips on how to gain the maximum benefit from your rewards credit card.
Optimizing your benefit begins with the choice of a rewards card. Before you accept one, you should look at the bonus it is offering. Is this actually something you will use? For example, you might like to accumulate airline miles for a romantic vacation. But if your spouse refuses to fly, it is of little use to you. Likewise, city dwellers who always rely on subways and taxis gain little from cards that pay bonuses in the form of free gasoline.
You also need to evaluate how you will earn bonuses. If you are a city dweller who always takes a taxi, earning cash back on gasoline purchases is useless to you. By the same token, if you almost always eat your meals in restaurants, earning bonuses for grocery store purchases does little for you.
Examine the point structure to see how quickly they can be earned. This should also include your spending habits. For instance, a card may offer an attractive number of points for stays at select hotel chains. This might work well if you are constantly on the road for business. But if you sleep at home 364 nights a year, it would take a lifetime to earn enough points to matter, which also means you should look at how quickly the points expire. The most desirable offers have points that do not expire.
It pays to choose a rewards card carefully. With so many to offers available, there is no need to accept any card just because there is some type of reward attached. Choose only those you can truly utilize. And watch out for annual fees that can offset any bonuses earned. A card that will pay you 1% cash back on a maximum of ,500 worth of purchases, but charges an annual fee of , gains you nothing. One that offers no reward, but charges no fee, is just as good a deal.
If you are torn between two rewards, you can always use two different cards. Perhaps you can choose one that offers airline miles that do not expire to accumulate points for a vacation down the road. You can use this card when traveling on business or making major purchases to make the miles add up faster. Then you might choose a card that pays a nice percentage back on grocery store purchases for everyday use.
The same common sense that you apply to other types of credit purchases should also be used for your rewards credit card. Try to pay more than the minimum due to avoid excessive interest. Do not make purchases merely to get a bonus. Evaluate all of the credit card terms carefully, including interest rate. But if you choose your rewards card carefully and use it wisely, it can stretch your purchasing dollar.
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Tags: Credit Cards