Credit cards that offer you rewards can be really terrific. They give you cash back or let you purchase things without spending money out of pocket. However, they only work if you’re savvy about how to use them. You need to make sure that you get yourself a good rewards card, that you understand all of the details about how it works and that you’ll be able to make use of the rewards within a sensible time period.
- Use only one rewards card. There is no point to using a bunch of different rewards cards because the rewards will be too spread out across them to make any use of them. The only exception here is if you use one general rewards card and one specific rewards card. For example, a gas rebate card often gives you as much as 6% back on gas so you may use that card specifically when purchasing fuel but use a general rewards card for all other purchases.
- Understand how rewards are given. The main reason that people don’t maximize the use of their rewards cards is because they don’t actually understand how the rewards add up. The credit card companies often intentionally make this confusing so that people will end up getting less rewards. You should make sure that you know what percentage you get back in cash on what types of purchases and / or how points add up towards purchases. For example, you may get 3% cash back on travel purchases but only 1% cash back on all other purchases; that’s important to know.
- Understand how to cash out rewards. The other problem for a lot of people is that they don’t know how to get their rewards. Cash back rewards often require that you request the rewards in writing; it’s not just automatic. Points rewards require that you look through the online catalog available with the company to find products that can be purchased for the number of points that you have. If you don’t know how to get your rewards, they don’t do you any good.
- Be highly aware of restrictions on your rewards. The most common restriction is the expiration date. Many rewards points expire if they aren’t used within a certain time period. Another common restriction is a cap on how many points can be earned in a year. For travel rewards cards, there may be restrictions on when reward travel can be taken. Stick within the restrictions and limits to get the most out of the card.
- Use the card for everything. The more that you use the card, the more rewards you get back in return. Use the card to make daily purchases as well as to pay utilities and other monthly bills.
- Pay the card off in full each month. There is no point to racking up rewards if you’re also racking up a huge debt that requires you to pay a bunch of interest every month. Pay the card off completely at the end of each billing cycle in order to make sure you’re getting those rewards at no cost.
- Avoid all fees and penalties. Don’t get a card with an annual fee. Don’t ever pay late and incur a late fee.
Be smart about the use of your rewards cards if you want to actually get something out of them.
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