Forget about credit cards being a status symbol for a moment. Using them can be rewarding, think of miles, points, cash back, and other perks. These credit card rewards work like gifts given to you by your issuer with applicable terms and conditions you have to know of.
How do you earn rewards?
The type of rewards you earn depends on the type of card you have. A travel rewards card for airline miles and hotel perks; a cash back card for rebates on gas and grocery purchases, etc.
It’s important that you get a card that fits your lifestyle, something that you regularly use so you can rack up points. It makes little sense to get an airline miles card if you are more of a shopper than a frequent flyer.
To get a reward, you must spend the minimum amount set by your credit card company. Say you’ll get a gift card when you accumulate $1,200 in book purchases.
While getting rewards on purchases may be automatic every time you spend the minimum amount, some credit card rewards programs require you to sign up so you can avail of their bonuses.
How do you redeem rewards?
The value of a bonus point is set by the credit card issuer as shown by its burn rate, e.g. 1 cent per point, when you redeem your rewards.
Be active in redeeming your rewards as they can be good for a certain period only, some points could expire in 18 to 24 months. Do also know that there’s a limit to the number of points you can redeem every year.
One more thing, your account must be in good standing so you can enjoy your points. Fail to make your payment that month and you’ll forfeit bonus points racked up during that period and pay a fee to reinstate them.
It comes at no cost to redeem your rewards if you pay your balances in full every month.
What do you need to remember about credit card rewards?
Credit cards are infamous for their complicated terms and their rewards programs are not an exception. Terms can change so awareness is key. This is to prevent the loss of miles/points you’ve worked hard to accumulate.
Because these are hard-earned points, don’t trade them so easily for items or merchandise that won’t return their value. Reserve them for the more important ones like flights or anything up to their worth.
If you are maintaining many credit cards, focus on the ones that reward you most with miles, gift cards and so on. Concentrate your spending on such cards. Still, don’t fall into the trap of spending for the sake of earning rewards. You still have to pay for those purchases even when you don’t need them and just acted on impulse.
If you are getting a rewards card, consider its annual fees, charges, and rates.