Up The Credit Card Rewards
Credit cards can be your best friend or your worst enemy. If you have your credit card spending under control and pay your card bills in full each month then a reward credit card could be your new best friend. Without needing to change you spending habits you can earn cashback, flights, travel and shopping vouchers. Find out how to mazimize your rewards.
There's a reason card issuers offer so many reward credit cards: people actually like them. Many people enjoy the thrill of getting a return on all the spending they do. Whether you charge large purchases or more mundane transactions to your credit card, it is necessary to have a plan to maximise the value you derive from your reward credit cards.
Here are some steps you can take to leverage your normal household spending to generate points from your reward credit cards.
- Always pay in full and on time. Keep in mind that reward credit cards attract interest rates in the high teens and may not be advisable for those who intend to carry a certain level of debt. Carrying a balance will subject you to interest charges and completely negate the benefits of rewards. So will late payments, which attract stiff penalty fees. In addition, missing the due dates for payments may lead to forfeiture of your points or suspension of your privilege to earn rewards.
- Be aware of your spending profile. There is a bewildering array of reward credit cards, and each scheme tends to fit a different spending pattern. The card may put together a strange set of items which qualify for their rewards and cash-backs. There should be a couple or so reward credit cards that will best fit your spending profile, allowing you to maximize your points earned or cash-backs from your ordinary expenses. If you travel a lot, you may need frequent flyer cards with rewards for miles and hotels, such as those offered by American Express credit cards. If you do not want to lose any points in the conversion to products, you can opt for cash-back reward credit cards.
- Maximise reward credit cards usage. Many people write a cheque, pay cash or use a bank debit card for groceries. Take advantage of the potential for greater points with needed grocery spending. Use the cards for online payments on household bills (if your utility company allows it and if there is no additional fee imposed on card payments. Check if it is possible to pay your monthly mortgage or rent by credit card. You can get significant monthly rewards earnings through these necessary recurring expenses. But make sure to pay them all off every time because interest charges on the large amounts involved will erase the value of your reward points. And, make sure there is enough room in your credit limits (you can always ask the card issuer to increase your credit limit).
- Make sure there are no blackout dates. Some reward credit cards limit the validity of your earned points by putting expiration dates. All your hard-earned points will be for naught since you can no longer redeem them after the expiry. Pick the reward credit cards that do not have these restrictions so you can enjoy what you have earned regardless of how long it takes.
It would be advisable to charge to your rewards credit card as much of your household spending (whether necessary or discretionary) as you can. You will maximise your credit card rewards this way. In addition, it will be easier for you to track all your monthly outgoings through the monthly statement.
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ABOUT THE AUTHOR
Richars Greenwood runs a network of finance comparison websites to help consumers compare the best offers on the market before they make a credit card application. The site features leading Aussie credit cards from issuers including HSBC and NAB.