How To Optimize Your Rewards Credit Card

A Rewards Credit Card Can Increase Your Buying Power

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.

Getting the most from your rewards card begins with proper selection. Examine the reward offered by a card before you apply for it. Evaluate whether it is a bonus you can actually use. If you are married to someone with a deeply ingrained fear of flying, collecting airline miles for a dream vacation would be futile. Likewise, discounts on gasoline are useless to someone who does not own a car and always takes public transportation.

Look at how the bonuses will be earned. If you do not own a car, you will probably not be buying gasoline, so getting five percent back on such purchases is meaningless. Likewise, a card that offers a nice cash back bonus on purchases made at grocery stores does little good for someone who always dines out.

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 $7,500 worth of purchases, but charges an annual fee of $75, gains you nothing. One that offers no reward, but charges no fee, is just as good a deal.

But what if you cannot decide between two dramatically different rewards? You might want to use both. For instance, one with airline miles that never expire can be used to save for a future vacation. In the meantime, one that pays cash back for typical daily living expenses can make tight budgets a little more bearable.

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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How To Optimize Your Rewards Credit Card

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