How to Optimize Credit Card Rewards

A credit card with the right reward program can bring many benefits for its user.  However, the best way to get rewarded is using your card strategically.  In this article, we will discuss tips on how you can optimize credit card rewards in the best possible way.

Choose a card that matches your lifestyle. What kinds of purchases do you plan to use your credit card for?  If you are a frequent traveller who uses your card to purchase airline tickets and make hotel reservations, then a credit card with airline miles rewards or frequent flier miles reward is the perfect choice.  On the other hand, if you’re not a big credit card spender, consider choosing a card with cash back rewards or gas rewards.

Plan your spending.  Plan your spending ahead of time.  Don’t just charge unplanned purchases to your card because it can easily lead to bad debt.  Will you be able to pay your full balance on time?  Is it an important purchase?  These are questions you should think about before swiping that card. Before using your reward credit card to shop, you should first think about your repayment obligation. 

Pay your balance in full. Don’t be content with paying just the minimum due.  You should pay your full balance each month to avoid incurring additional interest rate charges.  Keep in mind that credit cards with rewards generally carry higher APR than ordinary credit cards.  If you will carry over your balance from one month to the next, you will end up paying more on interest rate fees.

Understand the rules of the reward program.  The rules vary depending on the credit card issuer and the type of reward program offered.  For example, how will you be able to earn points? What kinds of purchases will qualify you to earn points?  What are the rules of redemption? It’s very important to familiarize yourself with the terms and conditions of your chosen credit card so you can plan your credit card strategy. 

Buy from affiliate merchants.  Purchasing from shops affiliated with your credit card will help you get rewarded more quickly.  If you have not yet applied for a reward credit card, this is one factor that you should consider.

Choose no annual fee card.  A credit card with no annual fee is your best choice.  Some reward cards may carry yearly fees ranging from $50 to $100.  However, if you must pay $100 each year to keep your account active along with other credit card fees, you may end up spending more on maintenance costs than the value of rewards you earn.

Redeem your points on time.  Sometimes the points you earned can be forfeited if you fail to exchange it for rewards within a certain period.  You should be aware of your issuer’s rules with regards to redeeming rewards to avoid losing your hard-earned points.  Better yet, look for a reward credit card that will allow you to carry over unredeemed points for the next cycle.

Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of http://www.newhorizon.org such as their continuous effort in giving out Credit Repair Tips. NHBS also has a list of recommended best credit card rewards