A Rewards Credit Card Can Increase Your Buying Power
How To Optimize Your Rewards Credit Card
A rewards credit card can earn you some nice bonuses on purchases you are going to make anyway. However, many people fail to use them to maximize their potential.
The first thing you should do is to choose your rewards card or cards wisely. Look at what the card offers and ask yourself if this is something you can use. A card that offers airline miles may be useless to you if your spouse refuses to set foot on an airplane. If you live in a large city and always take a taxi, free gasoline probably does not tempt you.
Look at your purchasing habits, as well. If bonuses are earned when you purchase gasoline, you will not earn much if you do not drive a car. And if your at-home dining is limited to take out foods, grocery store purchases are going to contribute little to your points.
Think about how quickly you can earn the points. This involves not only the terms of the card but also your buying habits. If, for example, a card offers 100 points for every night you stay at a certain hotel chain, it might be a good plan for someone who travels extensively on business. Someone who stays at a hotel once or twice a year will spend the rest of his life earning points, which brings up another area to consider. How quickly do the points expire? The best offers feature points that never expire.
Select your rewards card carefully. There are many to choose from, so do not feel that you have to accept a card simply because it offers a reward. Make sure it is one that you can actually use. And try to locate one that does not charge an annual fee. If a card carries a $50 annual fee and 1% cash back on your first $5,000 of purchases a year, you just break even for the year. That is assuming you actually charge that much to the card during that time. If you do not, your rewards are a negative number.
If you are torn between two rewards, you can always use two different cards. Perhaps you can choose one that offers airline miles that do not expire to accumulate points for a vacation down the road. You can use this card when traveling on business or making major purchases to make the miles add up faster. Then you might choose a card that pays a nice percentage back on grocery store purchases for everyday use.
Use a rewards credit card with the same common sense you would apply to any credit card. Do not use it merely to earn reward points. You will want to make more than the minimum due each month, so do not overuse it. Look at all terms of the credit card offer, such as the interest charged and grace period. But with prudent selection and use, a rewards card can certainly increase your buying power.
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