Credit card rewards can provide amazing bonuses like free flights, cash back on everyday purchases, and other valuable bonuses. But trying to maximize rewards can lead unnecessary interest, fees, and even debt if you’re not careful about how you spend.
Before looking to capitalize on every credit card reward you can get your hands on, follow this guide to earn the greatest rewards.
Avoid Interest and Fees
There’s no point to earning credit card rewards if you’re going to cancel out their value with unnecessary charges. Interest and fees can add up fast, especially when rewards cards charge higher than average interest rates.
If you’re unable to stay away from fees, you might be better off avoiding credit cards altogether. Consider debit cards that don’t have some of the same fees and never charge interest since money is directly taken from your bank account. There are even debit card reward options available, too.
In terms of fees that are charged up-front, some cards come with annual fees that can cost up to $300 a year. While these cards often offer more valuable rewards and better benefits, make sure that the increased rewards are at least covering the cost of the fee. If you’re unsure, stick with cards that charge no annual fee as there are plenty of options that still offer decent rewards.
Research the Best Offers
Rewards offers are constantly changing, but there are ways to find the best credit card offers. One method is to comparison shop on sites that compile offers from multiple card issuers. These cards are often grouped by category and highlight the rewards clearly for easy comparison.
Additional options for finding a great credit card include going directly to banks’ websites. If you’re a current card holder, it might be worthwhile to call up your credit card company directly to ask about better offers. Sometimes the best offers are unadvertised and available to the best customers.
Search for Valuable Introductory Offers
Many of the best rewards are offered as an introductory offer for the credit card. For example, you might receive 25,000 airline miles just for signing up for a new credit card and spending $1,000 within the first few months.
Once your intro offer expires, you can consider opening new accounts to take advantage of other offers. Be cautious–opening new accounts is likely to affect your credit score.
Only Earn Rewards You’ll Use
Not all rewards are equal. Frequent flyer miles are a common offering, but not everyone will redeem miles or travel often. In fact, some estimates say that about 70% of frequent flyer miles are never used. These miles often expire, and restrictions placed on how you may redeem them for travel can make them tricky to use.
Even though airline miles may sound valuable, if you’re an infrequent traveler, choosing a cash back card might be a better option since you’ll simply get money back on your credit card statement. There’s often little to do to redeem these rewards other than logging into your credit card account and clicking on a reward option.
Carry Cards for Different Purposes
If you’re going to carry multiple cards, consider choosing ones that offer different rewards. Many cards offer varying rewards depending on where you’re spending money, and some cash-back options offer bonuses that change monthly or quarterly.
Consider an airline card if you’re a frequent traveler since some come with benefits like free checked bags or lounge access.
However, your airline card might not provide the best rewards for grocery shopping or gas purchases. Carrying a separate card that offers 5% cash back at the gas pump might make sense.
When comparing offers, do the math to determine what you can actually expect to earn. If you track your spending, look back and see how much you’ve spent in recent months on eligible purchases. Cash back is easy to calculate, but you’ll have to use estimate the cash value of airline miles. Miles are typically worth about one cent each, but can be worth up to ten cents if redeemed most effectively.
Don’t Overspend to Earn Rewards
Credit card rewards work best when there’s no need to alter your spending habits and you’ll get the benefits just as a bonus for making your everyday purchases.
You’re probably excited to earn free travel or get a $100 rebate from using your credit card. Be careful spending on your card doesn’t become a game where you’re focused more on earning rewards and less on sticking to a budget.
This can be challenging when you’re required to spend a certain dollar amount within a set period of time to earn a bonus. Be realistic when applying for credit cards to make sure you don’t choose one that requires spending more than you usually would.
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