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Tips for Making the Most of Your Credit Card Rewards

You’ve heard a lot about the risks of using credit cards, but you know they can help your financial situation when used wisely. If you have credit card rewards, learn how to make the most of their benefits, so you become a credit card success story rather than a cautionary tale.

Focus on Everyday Spending 

You’ve run a credit check to see which rewards credit card you qualify for, but you may feel overwhelmed by the number of options you have. When narrowing your selections, think about which cards and rewards match your everyday spending habits. For instance, you may like the idea of getting cash back every time you fill up on gas or get groceries. Beyond everyday spending, think of ways to combine your credit card with other rewards programs and cards.

Know Your Spending Habits

Think about how you usually spend money. Different rewards credit cards work best for different spending habits. Selecting a card that matches your current habits makes it easier for you to maximize your rewards. For instance, if you do a lot of traveling, look for cards that offer flyer miles or cash back for spending money on traveling. If you travel by car rather than by plane, a credit card that rewards you every time you spend money at the pump may suit you better. If you make purchases in several spending categories, a basic cash back rewards card may suit you best.

Use Your Sign-Up Bonus

To attract new customers, some credit card companies offer a sign-up bonus. For example, you could earn a lot of points by spending a specific amount of money when you first sign up for a card. If that’s the case, use your credit card for purchases you’d normally make with your debit card to qualify for the bonus. Just make sure you pay off your purchases as soon as possible, so you avoid interest fees. 

With bonuses, read over the terms and conditions carefully. That way, you understand which purchases help you meet the bonus requirements and which actions may disqualify you.

Understand Your Card’s Perks

Besides rewards, some credit cards come with extra perks, such as luggage insurance, access to airport lounges and hotel stay credits. This is another reason to read over the paperwork that comes with your card. You never know when you could qualify for an extended warranty on items you buy with your rewards card or special offers reserved for cardholders. No matter which perks your card comes with, think about how they can save you money on things you usually purchase.

Use Your Quarterly Rotating Rewards

Does your card come with quarterly rotating rewards? If so, familiarize yourself with the bonus category schedule, which may include everyday spending categories and niche purchases, such as monthly subscription boxes. Make the most of your rotating rewards by using them every quarter. To make this easier, set a repeating reminder on your phone so you never forget to maximize your card.

Do Not Carry a Balance

Carrying a balance on your rewards card from month to month eliminates the advantage of having a rewards card. You likely don’t want the money you save to become the money you spend on interest fees. Besides paying off credit card purchases ASAP, use the card for purchases well within your means. If you cannot afford something you want, consider saving up for it rather than putting it on your card.

When you understand how they work, rewards credit cards can become a great financial asset. Take your time when selecting your card, and exercise caution when using your card.

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