5 Tips for Getting the Most Out of Your Rewards Credit Card

September 20, 2017

Credit Cards

One of the best things about choosing to use a rewards credit card for your day-to-day spending is the points, miles or cash back you can earn every time you swipe. But it can be tricky. To make sure you’re getting the most out of your card, take a look at the tips below.

1. Pick a card that offers rewards you’ll actually use

It’s easy to get caught up in the excitement around a new card that’s just hit the market. But before you apply, consider whether the card comes with a rewards program that actually fits your lifestyle. Otherwise, you might get stuck with a bunch of points or miles that you’ll never redeem — something that happens to 1 in 5 consumers, according to NerdWallet’s research on reward cards.

Doing some digging upfront to find a card that will be valuable to you is the key to ensuring you’ll get the most out of your plastic.

2. Know your card’s rewards earning structure

By investing a little time in reading your card’s terms and conditions, you might find there are ways to score extra points on certain kinds of spending.

For example, it’s common for travel credit cards to award extra points or miles for every dollar spent on dining out. Consequently, using your travel card when you take your family out to dinner or pick up your morning coffee is a smart idea, because it will help you get to your next vacation faster. Knowledge is power, so get familiar with the ins and outs of how to maximize earning your rewards.

3. Budget carefully every month

If you’re carrying a balance on your card and justifying it with all the rewards you’re earning, here’s a wake-up call: You’re paying out much more than you’re bringing in. Most credit cards return only about 1% of your spending in rewards, and charge double-digit interest rates on unpaid balances.

To make the math work in your favor, stick to a budget so you don’t put more on your card than you can pay off each month.

4. Keep your account in good standing

One of the biggest mistakes you can make with a credit card is to fall behind on payments. Miss one and your account will no longer be in good standing and your ability to earn rewards could be jeopardized. Also, your credit score will suffer.

The solution? Pay your credit card bill on time each month, preferably in full but at least the minimum due. Online bill pay can make that process fast and easy.

5. Be smart about redeeming your rewards

Many rewards cards have multiple options when it comes time to redeem points or miles. For example, in some cases you’ll be able to choose between travel credits or merchandise.

However, it’s common for points or miles to vary substantially in value depending on how you cash them in. Before you go through with a rewards redemption, do the math to figure out which choice will give you the most bang per point. After all, there’s no sense in using your rewards on a vacuum when they would go further if redeemed for airfare.

Following these tips can help sweeten the treats a rewards card can provide while you navigate the tricky ins and outs of how it all works.