When it comes to credit card rewards points, there are two kinds of people—savers and redeemers. Do you use your rewards points or cash back as soon as possible? Or bank them for when you really need help? Although I probably fall more on the saver side, there is something to be said for redeeming more often. It all depends on what motivates you.
Earning more points or cash back to achieve your goal faster requires having a clear understanding of how each credit card works and employing a bit of strategy. Get started with these five tips:
- Review your budget to see what you can pay for with a credit card. One strategy is to put everything you can on your credit cards. This only works if you have the money for these bills already accounted for in your budget and you pay your credit card bill in full each month with the money you have set aside.
- Know which cards earn more rewards for certain categories. Some credit cards earn rewards for every dollar you spend. Some earn higher rewards on certain spending categories. It is beneficial to know what those categories are so you can maximize your rewards.
- Consider your personal spending lifestyle. When shopping for a new rewards credit card, it can be easy to be lured in by bonus offers. A rewards credit card that only earns points on limited spending categories—say, dining out and travel—but has a signing bonus of 20,000 points sounds enticing. But if you rarely eat out or travel, it doesn’t make much sense. Instead, find a card that earns on everything or specific categories you utilize frequently.
Set up automated payments and notifications. Check any auto payments you have set up and make sure they are being paid with your rewards credit card and not your debit card.
Don’t forget to set up alerts and notifications on your account so you will be able to quickly catch any suspicious activity.
- Use shopping portals. Some rewards programs offer shopping portals—a website with access to a multitude of preferred vendors. Through these portals, anything you purchase with the preferred credit card can earn extra rewards points. Major airline credit cards often offer these shopping portals.
No matter how you spend your rewards, keep in mind that they are only worth it if you:
- Pay your credit card bill in full every month so your rewards benefits do not get eaten up by interest fees.
- Be sure to redeem your rewards before they expire.