Reward cards are a great way to get more from your credit card, but they are a financial minefield, combining risk and reward, and not always in equal measures.
The goal is to find a card that is more reward and less risk, and to make sure that you use it properly. So, read on for tips on how to maximize the value of your reward credit card!
#1 – Shop Around
No two cards are the same.
You might get air miles from one, then reward points from the next, and maybe a combination from another.
Do not jump in and do not be tempted by the first offer you get. These cards are designed to tempt you, with big reward schemes that are created to gloss over high fees and extortionate APR rates.
These negatives are usually more than enough to offset the positives that the rewards bring. So pay attention, read the small print on every card, and compare as many as you can before you make your choice.
#2 – Understand What’s Right for You
If you’re not going to pay your bills every month, then a reward card may not be for you. The best cards have higher APRs and generally favor users who have the money they need to cover their bills every month, users who want a credit card for convenience and security, and not to pile on the debt.
Do not get more credit than you will need or can afford, do not apply for too many cards at once and generally don’t go overboard. All of this can completely negate any benefits that the rewards can generate.
You should also be prepared to do your sums to discover if a card is right for you. One reward card might charge a hefty annual or even monthly fee, but in return you might get a sizable discount.
The question is, will that discount cover the losses that the fee takes away?
For instance, the American Express Blue Cash Preferred Card charges $75 a year, but you can earn 6% on your grocery shopping. If you live alone and therefore don’t spend a lot on groceries, this is not going to make much of a difference and you might be better off with a card that offers air miles, or money off your bills. But if you have a large family, one that goes trough a mountain of food every week, then you’ll save much more than you will lose.
#3 – Play the System
Your reward card will restrict you to specific retailers, but not specific products.
There are ways around this though.
One of the most popular “tricks” is to purchase MasterCard or VISA gift cards from retailers that are included in the scheme. In turn, you can use them on online retailers that are not.
If you can find these gift cards at retailers that generate the highest cash back percentage, then you can use this card on everything you buy and effectively get that high percentage in every store and on everything you buy.
You should read-up on the included retailers every time you make a large purchase and you should also look at your options whenever you’re buying a new car, a new house, or whenever you’re renovating.
Everything from new mortgages to new loans and more can generate points with some reward schemes. You can even use these cards to gamble (assuming this is legal in your state), effectively treating them like a rake-back scheme and adding some extra points every time you play blackjack, poker or other high percentage games.
#4 – Shop Through the Portal
Most reward cards will have an online shopping portal. This is the case with many of the biggest providers, including Chase, Barclays, Citi and Discover. Too many reward card owners either don’t know these portals exist, or simply do not use them. But you could be missing out on thousands of points and hundreds of dollars worth of cash back by not paying attention to them.
These portals connect you to hundreds of stores, selling everything you could need, and whenever you use one of them, you will generate reward points. In fact, if you’re paid for every dollar that you spend, then you’ll be earning reward points on top of reward points. So, whenever you need to buy a gift, whenever you want to go on a shopping spree, make sure you connect to this portal first.
#5 – Take Advantage of 1:1 Point Transfers
If your circumstances change, if you suddenly start taking more flights or making different purchases, or if you just tire of your current scheme, then remember that you can change suppliers and you can take your points with you. Most reward cards will allow you to transfer points, and not only could this be a necessity, but it’s something you should look to do every now and then anyway.
There are sign-up bonuses, new member bonuses and more that could make it beneficial for you to make a switch every now and then. These bonuses usually require you to meet certain criteria, often in the form of a minimum spend, so make are you research these requirements in advance.
#6 – Pay Attention
Let’s be honest, no one pays attention to what their bank says on social media, but you should. If you signup to the newsletter of your reward card provider, and if you add them to your Twitter and your Facebook feed, you can stay informed of any new offers that are available. There are special offers all of the time, ones that could give your cash back a boost, but the majority of these go unnoticed by the typical user.