Credit card issuers love to entice customers to shop with their credit cards. Although reward credit cards have many great benefits, the ultimate goal is to lure you into spending more and creating higher interest charges. They try to appeal to the needs of everyone; including, the frequent flyer, daily drivers, college students, shop-o-holics and anyone who uses a credit card on a daily basis. Don’t fall prey to the credit card companies’ tactics! Here’s how you can take advantage of reward credit cards:
When to Use Reward Cards
Reward credit cards allow you to benefit in numerous ways. Although they tend to have higher rates than standard, non-reward credit cards, consider the amount you can earn with reward credit cards and determine how the rewards can offset higher interest charges. If you’re able to payoff your balance in full each month or before the ‘grace period’ ends, reward credit cards could be a great way to earn extra cash or other bonuses without paying additional interest charges.
The best way to take advantage of this situation is to use reward credit cards only as a secondary option for SHORT-TERM charges. Since you may have a higher APR with one of these offers, use a lower rate credit card for your LONG-TERM purchases to avoid the extra interest charges. If you know you can pay off purchases quickly, use your reward credit card instead and earn a bonus! Just make sure you pay off your balance before too much interest accumulates. This could negate any benefit you gained from using the card in the first place.
Earning More Rewards
Now that you’re using reward credit cards to your advantage, here are some other ways to benefit and maximize your earnings:
- Stick with the credit card company’s products and services. Sometimes you can save money or earn extra bonuses for your loyalty.
- Use the credit card company’s partners. Since many reward offers provide increased bonuses for shopping at -or- using specific merchants, determine where you can get the most rewards and use these locations to maximize your earnings.
- Take advantage of sign-up bonuses or special introductory offers. Many times, credit card companies will give you extra bonus points for signing up -or- increased reward percentages for an introductory period after you apply. Take advantage!
- Pay for everyday purchases with your reward credit card. As long as you remain 100% dedicated to paying your bill in full each month, you can earn rewards on a regular basis from your normal, everyday spending habits. Gas, groceries, drug store purchases, even utilities and mortgage payments can all be charged to your credit card.
- Have credit cards for all members of the family to use. Although you may want to be cautious with certain members of the family (wink wink), allowing them to make purchases you intend to pay for anyway will allow you to build more points.
Don’t fall into the hands of the credit card companies! Don’t misuse your reward credit card and create a large debt you can’t handle. Since interest rates are normally higher with these offers, you’ll be paying more if you carry a balance with a reward credit card vs. a standard credit card (even with all the incentives). Pay off your balances quickly and avoid these additional costs.