Credit Card Shopping for Fun and Profit: Rewards Cards
Rewards from credit card companies have been on the increase now for years, ever since the Discover Card first started offering cash back on credit card purchases. Air travel, cash back on purchases, cheap theater tickets, exotic vacations - they’re all available as rewards, and there are reward credit cards that can help you earn them faster.
Here are a few tips to keep in mind when shopping for the right rewards credit card for you:
* Do you pay the entire balance on your credit card every month? If you don’t, then a reward card might not be right for you. If you maintain a balance on your credit card the interest that you pay each month may exceed the value of any rewards you might accrue. You should either get into the habit of paying the entire balance every month, or look instead for a low interest credit card to save money.
* Check the points. Know how much you need for a card reward before you commit on the card. For example the number of points needed for a round trip coach ticket varies across different credit cards. Make sure that you get the best deal that you can find.
* Check the expiration date. More and more airlines are offering points that do not expire. Credit card vendors, however, can have a use-it or lose-it policy. Depending on your spending habits it may take you a long time to qualify for the awards that you are interested in (whether they’re airline tickets or not) so look for cards that offer points that don’t expire.
* Which types of purchases optimize the number of points you receive? Rewards cards can vary the types of purchases that lead to points (or double points). Some American Express cards offer double points on gasoline purchases. Read your credit card agreement and be sure to understand how you can maximize your points. Knowing which purchases count most toward rewards can get you to a required point level faster.
* Pay household bills with your credit card. This one is huge for me. I pay for gasoline, groceries, electricity, heating oil, cable TV and water all with my credit card. If you get used to paying as many bills as possible with your credit card (and then transferring the money from your checking account to your credit card) bill payment gets easier, the credit card balance won’t get away from you, and you’ll earn points faster than ever.
* Get the best sign-up bonus. Most rewards cards offer a sign-up bonus of points. As you ‘re shopping for a rewards card find one that offers a good bonus for just applying and being accepted. Often the bonus alone can get you half-way to a high-point award. Once you achieve the award you want you can shop for another rewards card, sign up, close your old account and reap the benefits of another sing-up bonus!
I have a big family - grocery bills alone can amount to $200 per week, and I pay for everything with a rewards card. Using the above techniques I have been able to cash in on free round trip airfare in as little as two or three months. That’s a huge savings! It has allowed me to take trips, visit friends and go to events that I probably wouldn’t have gone to if I had to purchase airfare, and that fact is more valuable than the cash savings! Try it - it’ll work for you too.