Today, I have a great post for you by Christine, a blogger and professional writer. She will share with us some great advice on credit card rewards usage and how to get the most out of them! I believe that credit card rewards, points or miles could be a little confusing to many of us. So, this post will serve as a great tool to understand more about how we can successfully take advantage of credit card rewards programs!
How to Put Your Credit Card Rewards to Work
Credit cards can be really tricky to use. Everyone tells you that you need one, to build credit. But then they also tell you not to use them, to avoid debt. And then you add ‘rewards’ into the mix, as if it wasn’t confusing enough. And there are different types of rewards; Do you want cash back, or do you want miles? And what are the rates of return for these rewards?
There are a lot of pros and cons to using a credit card, but at the end of the day, if you can afford to pay them off at the end of every month to avoid accruing interest, it’s a good idea to use them. Having a line of credit improves your credit score, as long as you pay off your balance in a timely manner every month. And the rewards are a good reason to use your credit card, too.
Types of rewards
Trying to decipher what the conditions of your credit card are can be really confusing and honestly, it can be a lot to handle. There are two main types of rewards: miles and cash back. The idea behind earning points as miles is that a certain number of “miles” equates a certain dollar amount when purchasing airline tickets.
Sometimes a flight may cost a ridiculous number of miles, so when choosing this route, ask a lot of people who have mile credit cards about their experiences with their specific cards. Ideally, you want to select a miles credit card that has very few limitations, no blackout dates, and a great conversion rate.
It’s a similar story with cash back. Every credit card you look at is going to have a different conversion rate and different ways to earn. Some cards will have a higher amount of cash back when you spend money on certain things, like groceries, gas, or eating out. Consider what you spend the most money on, and try to find a card that gives you the most cash back for those types of purchases. This way you get the biggest return on investment.
Sign-up deals and annual fees
A lot of credit card companies will use incentives to try and get you to select their card. Some cards will give you 10,000+ air miles if you spend at least $3,000 on the card within the first two months of having the card. The amounts and timeframe for this can vary, but it is a pretty common practice.
This can be great, if you have a lot of large purchases inevitably coming up in your future, such as if you really need to replace your laptop and you’re in the middle of remodeling your kitchen. Or if you have a trip planned and you haven’t bought the tickets quite yet. But don’t let this incentive cause you to spend money needlessly when you weren’t planning to. While it may be a great incentive, it will be bad for you if you didn’t have that kind of spending budgeted out.
Annual fees are pretty common when it comes to credit card accounts. A lot of credit card companies will give you the first year free, with no annual fee. The purpose of doing this is to get you hooked on the great incentives and plans that are associated with that specific card, before you have to start paying for it. You won’t want to have to replace the card because you’ve grown accustomed to the rewards, so you’ll be willing to pay the annual fee.
There are cards out there that have no annual fee, but they don’t have nearly as great rewards plans as cards that do charge an annual fee. This is something to weigh and consider when choosing a card. If the amount that you’ll earn back in benefits is greater than the amount you’ll be spending on an annual fee, then it’s probably a good idea to get that card.
Converting points to actual dollars
This is the part that is the most confusing. A lot of people let their points build up for quite a long time, not out of a lack of desire to use them, but because they simply don’t know how to access them. Every credit card company goes about things slightly differently, so if you’re confused, feel free to call your company and have them help you convert your points into something that you can actually use.
In most cases, you can either call the company or log into your online bank account, and easily redeem the points for cash or miles. Online there’s usually an easy to find option to let you convert these points. If you have a hard time finding it, a representative at your credit card company will easily be able to redeem the points for you, though.
About the Author:
Christine is a professional writer and an avid reader who’s passionate about storytelling in any form. At any given moment, she’s in the middle of at least three books on anything from psychology to ninjas. Although she’s a marathon swimmer and enjoys camping in the mountains, she believes there’s nothing better than a carton of ice cream and a Dawson’s Creek marathon. Follow more of her writing on Twitter @readwritechill.
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