7 Steps to Reward Credit Card Bliss

Rewards credit cards can be rewarding or disappointing.  It all boils down to how you manage it.  On this post, we’ll take a look at seven steps for you to enjoy the benefits your reward credit card offers:

1. Don’t carry a balance.  The high interest rate can be the worst aspect of a reward credit card.  Most reward cards carry much higher APR than their non-reward counterparts.  While the reward program may be attractive, you could end up spending more on interest rate charges if you often carry a balance in your account.  So what’s the best way to handle a reward credit card?  Pay off your full balance on time.
2. Get the maximum reward possible.  Some reward credit cards offer 1% cash back on general purchases and “up to” 5% cash back on special purchases.  As a reward cardholder, you should get to know what these “qualifying purchases” are.  This could be purchases made from affiliate merchants and establishments or items that below to a particular shopping category (ex. home improvement, clothing, toys, etc).
3. Skip the penalty fees.  Managing a credit card effectively means abiding by the Terms and Conditions of your issuer.  Be sure to submit your monthly payments on time.  Stick by your credit limit.  The penalty fees can prove to be steep.  Even worse, you could be disqualified from redeeming your hard-earned rewards if you are frequently late or if you often exceed your limit.
4. Recognize affiliates.  Purchasing from shops affiliated with your reward credit card can win you bigger points for every dollar you spent.  If you own a gas reward card, find out which gas stations are in partnership with your card.  Do you have an airline reward credit card?  If yes, be sure to patronize the airline company that sponsors your credit card.
5. Pay attention to limits. Reward credit cards also impose varying restrictions.  For example, there could be a limit to the value of rewards you can earn in a month or in a year.  Once you have reached $500 worth of rewards in a year, your credit card may stop giving you points even if you continue to use it for spending.  You should be well aware of these limits so you can plan the best strategy especially if you are a big spender.
6. Enjoy the non-monetary rewards.  Aside from cash rewards, you should find out what kind of perks and privileges are available to you as a cardholder.  For instance, many travel reward credit cards provide free travel insurance, car rental insurance, and roadside assistance to their cardholders.  You may also be entitled to enjoy free shipping, particularly on special occasions.  Enjoying these perks and privileges can enable you to save money.
7. Don’t chase after points.  You should be rewarded for important expenses that you charge to your credit card.  However, you should not blindly chase reward points without seriously consider your repayment obligations.  Doing so can easily lead to bad debt.

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 Free Credit Repair Tips. NHBS also has a list of recommended Credit Cards for Fair Credit