February 24, 2023

Get the Most From Your Credit Card Rewards

Credit card companies offer you rewards in order to encourage you to spend more money in an attempt to receive the top rewards.  All rewards cards appear to be a great proposition upon initial inspection.  It is detailed checking that determines what you can really expect from these credit cards.

Many rewards cards offer no benefit whatsoever in the event you carry over a balance from one month to the next.  If you have one of these cards, you must pay the balance each month to earn bonuses.  Most of these cards will raise the interest rate on carry-over balances.

Analyze the terms in detail.  Look for key phrases such as “up to.”  Up to  – it simply means, “at a maximum of.”  This is the absolute highest reward you could earn.  That does not necessarily mean that anyone has ever earned it.  You will probably need to do some major spending just to come close to earning this bonus.  Mostly likely your reward will be much less than the advertised “up to” bonus.  You are just chasing the carrot if you are thinking of earning this bonus.

Try to estimate what the bonuses or rewards will actually cost you.  You should have a good idea of the value of the reward.  If you have to spend five thousand dollars to receive a reward with a value of twenty-five dollars, you need to ask yourself if this is a good deal.

When it comes time to figure annual fees into the equation, you’ll probably realize that striving for that bonus is a moot effort.  Annual fees usually wipe out any value there may have been in the reward.  For example, your card may attach a thirty-dollar annual fee and the rewards terms might require you to spend three thousand dollars before you earn any points towards your rewards at all.  That’s a bad offer.

Investigate the rewards restrictions.  For instance, you might earn five percent cash back on purchases up to two hundred and fifty dollars.  Any money spent over that two hundred and fifty dollars is wasted when it comes to rewards.

Check on expiration dates.  Some rewards programs discontinue after a specific amount of time or by on a predetermined date.

Never base your credit card decision upon a rewards program.  Many other factors come into play when deciding what credit card is best suited to your financial situation. …