How to Really Maximize Your Credit Card Rewards

Credit cards with rewards are enjoying huge popularity among consumers. Everybody wants to get rewarded but the question is, are you really getting the most out your own reward credit card? In truth, getting rewarded largely depends on how well you can manage your account. In this article, we present smart strategies that you can apply to maximize your chance of getting rewarded.

1. Choose the Right Rewards Cards

You need to start with the right type of reward credit card. So how do you know which one is right is for you? What kind of purchases would you usually charge to your credit card and how often would you use it? Generally, reward credit cards offer 1 point for every 1 dollar worth of purchase but the type of reward offered may vary from cash back, hotel discounts, airline miles, gas rebates, etc. Which reward program matches your personal spending and lifestyle?

2. Don’t Sign Up for Teaser Offers

Some issuers offer low or zero introductory rates as part of their marketing plan. Customers are often easily enticed by a low rate or higher reward points but these offers usually do not last for long. Perhaps you might be able to enjoy a low rate for at least six months but what happens after that? Will you be stuck with a high-rate reward credit card? Maybe you can enjoy 5% cash back for three months but when the promo period expires, you may find that the value of rewards has dropped down to only 1% or even less. When looking for a reward credit card, don’t immediately sign up for the teaser offer. Always consider the long term implications of your choice.

3. Use your reward credit card for items or bills you will pay in cash.

The best way to earn points is to charge purchases to your reward credit card. Why not use it to pay for necessities that you will pay in cash anyway? Use your reward credit cards to pay your groceries and medicines. Charge your monthly utilities to your reward credit card, too. However, if you plan to do this strategy, there is one thing you should not fail to do. It is to use your cash to pay down your credit card charges in full and on time.

4. Pay in full and on time.

There is no need to wait for your due date before submitting your payment. The earlier you can pay your credit card bills, the better it would be for you. Don’t be content with just the minimum payment. Always pay your monthly balance in full.

5. Take advantage of perks that your reward credit card offers.

Surprisingly, many reward cardholders are not taking full advantage of the perks and privileges that their credit card provides such as travel insurance, extended warranty, price protection guarantee and more. Why pay the extra cash to get a separate travel insurance or to extend a warranty when your reward credit card provides it for you for free? Review the terms and conditions of your credit card and get to know your privileges as a cardholder.

Read More: How to Really Maximize Your Credit Card Rewards

Mistakes to Avoid for Reward Credit Cardholders

If you own a reward credit card, it is very important to take charge and not allow the prospect of earning rewards lead you to bad credit. Instead of letting your credit card take over, you should be the one to decide what types of purchases can be charged to your account. This may seem like an easy task but in reality, this can be a big challenge.

In fact, many reward credit cardholders are struggling to catch up with their bills primarily because of uncontrolled spending and poor credit card management. Let us talk about the most common mistakes reward cardholders make and how they can be avoided.

1. Paying Only the Minimum Due

It may be tempting to submit only the minimum monthly due payment instead of paying the balance in full. Some cardholders make this mistake even when they can afford to pay off their complete balance. Are you one of them too?

But if you own a credit card with reward, you have even more reason to pay your monthly balance in full. That’s because you are subjected to higher interest rates than non-reward cardholders. Imagine how much more you will end up paying, if you only pay the minimum within the next few months. The interest rate costs may well offset the value of rewards you earn.

2. Using Your Credit Card for Daily Purchases

There are two reasons why you should not charge daily purchases to your reward credit card. First, you are more likely to spend more than what your budget permits. Second, you are increasing the risk of maximizing or exceeding your limit, which can be damaging to your credit score.

Credit cards should never be used for unplanned purchases especially if you’re not sure if you will be able to pay your full balance on time. If you’re not careful, an item that you originally bought at $5 can turn to a $50 purchase because of the interest rate.

Read More: Mistakes to Avoid for Reward Credit Cardholders