Get the Most From Your Rewards Credit Card
Restrictions, fine print, and red tape can drastically limit what you get out of your rewards credit card. If you’ve done your part, used your credit card, paid your bill on time, your credit card should keep up it’s end of the deal and give you the rewards you were promised.
Unfortunately, it doesn’t always happen that way. Find out how you can get around your reward card’s restrictions and earn more rewards.
Pay your balance in full each month. Rewards credit cards tend to have a higher interest rate than other types of credit cards. When you carry a balance beyond the interest free period, you’ll end up with higher interest charges than you would on other credit cards.
The more you pay in interest, the less valuable your rewards will be. For example, if you pay $85 in interest and annual fee over the year, but only receive $75 in rewards, you haven’t really gained anything.
Rather than carrying a balance on a high interest rate rewards card, pay your balance in full every month. For some this is ‘easier said than done’, and for those in that boat, a low interest rate credit card is recommended instead.
Signing up for a card with a low interest rate will lessen the effect of interest charges. It’s still best to pay your balance in full each month to avoid interest charges all together.
Sign up for a rewards card based on how you spend. If you’re a big spender, then choose a rewards credit card with a high credit limit that will allow you to make purchases without being assessed over the limit fees.
Many rewards credit cards offer tiered rewards that reward you generously for the first dollars you charge and less generously (and sometimes not at all) for what you charge after that. This type of card is good for those who only charge a limited amount each month.
Other rewards cards do the opposite. They don’t reward you much on the first dollars you charge, but reward you more after that. If you tend to charge more, this is a better card for you, since you’ll be better rewarded for spending more.
Where you spend is also a factor. Some rewards credit cards only give you rewards when you spend in certain stores or charge certain types of items. If you seldom shop in those stores or purchase those items, don’t sign up for that rewards card. Instead, choose a card that will reward you for spending the way you already do.
Watch out for annual and reward participation fees. Nearly every reward card has an annual fee. Few cards comes with a free rewards program, and those which do will still have a general annual card fee.
The fee however, in relation to the benefits of the rewards is quite small, for instance the ANZ Balance Visa Card also have a rewards program fee of $22 per card. You’ll end up paying more fees when you have multiple cards on a single account.
The problem with annual fees and rewards program fees is, like interest charges, they can decrease and even eliminate the value of your reward. If you don’t spend enough and gain enough rewards to exceed the fees, the reward card simply isn’t worth it.
Cash is the best reward. There are lots of different rewards out there; Flights, merchandise, gift cards, and hotels to name a few. With a large range of rewards at hand, it’s easy to end up with things you don’t truly want our need.
Not only that, many cards have restrictions on how and when you can use your rewards. There may be minimum reward limits, conversion fees, specific vendors, or blackout dates keeping you from using your rewards at your convenience.
Cash is universal. Even though the credit card may only reward you in certain increments like $20 or $50, you’re able to use cash in far more places than you can use points. To find out the point to dollar value of Australia’s leading reward programs, see the reward program comparison here.
A credit to your account is the next best thing to cash. You can make a purchase in the amount of your reward, and then use your rewards to credit your account for what you’ve purchased. It’s just like you’ve used cash.
For more information, visit our section on the best reward program credit cards here.
Related posts:
- Rewards Credit Cards Aren’t For Everyone
- Find the Best Rewards Credit Card For Your Airline
- Best Credit Card Rewards - Comparing Programs
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