How To Optimize Your Rewards Credit Card
Credit cards that offer you a bonus for using them to make your purchases have become increasingly popular. Many people sign up for them but fail to get the most from the program. There are some things you can do to optimize your rewards credit card.
The first thing you should do is to choose your rewards card or cards wisely. Look at what the card offers and ask yourself if this is something you can use. A card that offers airline miles may be useless to you if your spouse refuses to set foot on an airplane. If you live in a large city and always take a taxi, free gasoline probably does not tempt you.
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.
Select your rewards card carefully. There are many to choose from, so do not feel that you have to accept a card simply because it offers a reward. Make sure it is one that you can actually use. And try to locate one that does not charge an annual fee. If a card carries a annual fee and 1% cash back on your first ,000 of purchases a year, you just break even for the year. That is assuming you actually charge that much to the card during that time. If you do not, your rewards are a negative number.
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.
Use a rewards credit card with the same common sense you would apply to any credit card. Do not use it merely to earn reward points. You will want to make more than the minimum due each month, so do not overuse it. Look at all terms of the credit card offer, such as the interest charged and grace period. But with prudent selection and use, a rewards card can certainly increase your buying power.
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