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How Do You Get the Most Out of Rewards Cards?

Jan 16, 2008
The entire point of having a rewards card is to get paid for what you would spend anyhow. These aren't the right choice for everyone. For example, if you tend to carry a balance and the rewards card carries a higher interest rate than a plain credit card, you may be best off with the plain one.

But when you have the rewards available to you, you may as well make the most of them. How can you do that?

1. Choose the right rewards card.

What are your shopping habits? Many cards give higher rewards for certain types of purchases. If this corresponds well to your own spending habits, you'll earn more.

For example, if you telecommute or have a very short drive to work, and do little other driving, a gas rewards card probably won't benefit you as much as one that pays you back on other types of purchases. But if you have to drive a lot, this type makes a lot more sense than others may.

2. Drop any with an annual fee.

There are plenty of no annual fee rewards credit cards out there. If you're paying to have one, you are probably losing out on a lot of what you would otherwise be getting from it.

Think about how much you would have to spend to cover a $50 annual fee. It's about $1000. Why lose that much of your shopping power?

3. Use it as much as possible while paying the balance off.

If you can keep the balance of the card paid off, there's no reason to not earn rewards on the money you have to spend anyhow. Many bills can be paid on credit cards, and of course regular purchases such as clothes and groceries can go on them too.

4. Don't spend just to earn points.

Spending money because you like earning points or rewards is a good way for things to get out of control. Think about what you really need, and don't forget that saving money for the long term is important. There are no good reasons to spend just to see your points go up on your rewards credit card.

5. Know the terms.

Sometimes the percentage rate you get back changes in 6 months to a year. In other words, the most advantageous card now may be different when the terms change. Keep up with what the credit card company is giving you.

While these kinds of tips aren't for everyone, it's important to understand what to do if you do use a rewards card.
About the Author
Stephanie Foster blogs at http://credit-blog.findcreditonline.com/ about using your credit wisely. If you are shopping for a rewards card , her site offers a selection of them at her site.
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