Credit Card Rewards: How to Max Your Points
Posted at by ifydcat on category CreditDo you still feel it worthwhile to pay for purchases with your rewards credit cards? It seems issuers of rewards credit cards are taking great pains to offer rewards programs but the rewards now come with many strings attached. For instance, rewards items seem to be priced higher and your ability to earn points is lower.
But although you may have to jump over more hurdles, there are still ways to profit from rewards credit cards. Below are a few ways to boost your return.
- Assess your spending habits. To maximise the accumulation of rewards points, you need to calculate the amount you spend on your rewards credit cards each month. Your spending habits may not necessarily match with your rewards card. Recent consumer research has found that spending under $1,000 per month will provide little net reward. To get the most out of rewards credit cards, you should charge at least $12,000 a year on your plastic. If the sums don’t add up for you then it may be that the best credit card for you is actually another card type.
- Match rewards programs with your interests. When you do a credit card comparison, you realise that there are four types of rewards credit cards: frequent flyer rewards, general rewards, cash-back rewards, and instant rewards. If you are a regular traveler then your may benefit from frequent flyer credit cards but there would be little point if you don’t have a need or desire to fly often. If youre concerned with maximising your budget, you might be better off having cash-back rewards credit cards or similar cards that reward you for purchasing goods you need to buy regularly.
- Get rid of less advantageous rewards cards. If you think you can earn more points by having several rewards credit cards, then think again. Chances are you are diffusing your capability to earn more rewards by spreading the spending over so many cards. Or, you may be charging more spending onto rewards credit cards whose advantages are inferior to others. If you do have many cards in your wallet, you may have to do credit card comparisons to decide which among them need to be dropped. Cards with higher interest rates and expensive annual fees may have to go first.
- Be aware of the rules. Make sure you read through the fine print for the rewards program to understand how it works, for example many schemes have expiry dates on the points earned so its a case of use them or lose them. While that used to be the rule, it is now common practice in the industry to set an expiry date on accumulated rewards points. Make sure to read the fine print when you do your credit card comparison.
- Never carry balances, if possible. When you don’t pay your credit card statement in full each month you’ll be paying interest on purchases, the cost of which will quickly offset the benefits of the rewards. This is particularly true if you want to earn points towards a frequent flyer program. If, however, you cannot pay off the entire balance each month but would still want rewards credit cards to be part of you, you may have to settle for rewards programs offering cash-back or instant rewards.
Rewards credit cards are now on offer from all issuers. The question used to be whether to obtain a rewards credit card or not, but things have changed. It has boiled down to a choice of which one will suit you best not only in terms of the rewards scheme but also interest rate, fees, and other conditions in the fine print. By doing some good credit card comparison and planning your spending you can boost your return from rewards credit cards.
Article by Richard Greenwood co-founder of compareyourbank.com.au