8 ways to get the most out of your rewards.
It’s a good time to shop for a rewards card: credit card companies are offering heftier bonuses this year for signing up for one, according to Kiplinger.
However, you don’t want a card that requires you to spend more than you should ― ideally, a rewards card will earn you extra on items you’re already buying.
The following eight suggestions can help you get the biggest return from your rewards card:
- Pick a card that fits your lifestyle: Review six months’ worth of bills to determine what you’re regularly purchasing, and choose a card that’ll earn you the most in that category, such as travel perks and airline miles for business or pleasure. Or, figure out what’s most important to you and choose a card that offers those rewards. Just beware of cards that devalue points and miles, warns Time.
- Be aware of “minimums”: Before signing up for a card, look to see if it requires you to spend a minimum within a specified timeframe to start earning rewards. Avoid that card if the minimum exceeds your budget. Or, if you can afford it, U.S. News & World Report recommends buying a gift card in that amount for a general merchandise store or site, such as Amazon, that you know you’ll use down the road.
- Regularly review what you’re getting: When changing a card’s terms, credit providers are supposed to notify you of the impact, according to Creditcards.com. For instance, changes could mean you’ll earn fewer points on certain items or a lower amount of cash for purchases. So carefully read any updates you get via mail or email to make sure your card is still worthwhile.
- Factor in the annual fee: Paying an additional fee to have a card could potentially cut into what you earn from it. However, in some cases, the card’s amenities might offset the amount. Cards that charge an annual fee often give a higher introductory rewards point bonus, according to Consumer Reports, and some airline mile cards will forgo the fee for the first year of use — letting you rack up miles at no cost.
- Don’t overlook other perks: Reward points and cash aren’t the only benefits cards offer. When shopping for a new one, U.S. News & World Report recommends checking for amenities ― such as insurance coverage if a purchase is lost or stolen, or a price protection option that’ll refund the difference if you find an item for less after buying it.
- Focus your spending: It may be tempting to get several credit cards in order to earn multiple rewards. Applying for multiple credit cards, though, could potentially hurt your credit score, according to FICO. For example, your score may lower if you carry balances on one or more cards. For more info, check out these 9 answers to your most pressing credit score conundrums.
Related: The truth about your credit score
- Use ’em or lose them: Roughly a third of all credit card rewards aren’t ever used, according to a study from Swift Exchange and Colloquy. So check your card terms periodically to make sure your points or miles aren’t about to expire, and put those rewards to good use.
- Pay off the full balance each month: Last, but not least, paying your credit rewards card off in full each month is very important, because the interest rates on these kinds of cards are generally higher, according to Credit.com. If you are carrying a balance on other cards, a rewards cards may not be your best option at this time — at least until you can pay off what you owe.