A Rewards Credit Card Can Increase Your Buying Power
Credit cards that offer you a bonus for using them to make your purchases have become increasingly popular. Many people sign up for them but fail to get the most from the program. There are some things you can do to optimize your rewards credit card.
Optimizing your benefit begins with the choice of a rewards card. Before you accept one, you should look at the bonus it is offering. Is this actually something you will use? For example, you might like to accumulate airline miles for a romantic vacation. But if your spouse refuses to fly, it is of little use to you. Likewise, city dwellers who always rely on subways and taxis gain little from cards that pay bonuses in the form of free gasoline.
You also need to evaluate how you will earn bonuses. If you are a city dweller who always takes a taxi, earning cash back on gasoline purchases is useless to you. By the same token, if you almost always eat your meals in restaurants, earning bonuses for grocery store purchases does little for you.
Think about how quickly you can earn the points. This involves not only the terms of the card but also your buying habits. If, for example, a card offers 100 points for every night you stay at a certain hotel chain, it might be a good plan for someone who travels extensively on business. Someone who stays at a hotel once or twice a year will spend the rest of his life earning points, which brings up another area to consider. How quickly do the points expire? The best offers feature points that never expire.
It pays to choose a rewards card carefully. With so many to offers available, there is no need to accept any card just because there is some type of reward attached. Choose only those you can truly utilize. And watch out for annual fees that can offset any bonuses earned. A card that will pay you 1% cash back on a maximum of ,500 worth of purchases, but charges an annual fee of , gains you nothing. One that offers no reward, but charges no fee, is just as good a deal.
If you are torn between two rewards, you can always use two different cards. Perhaps you can choose one that offers airline miles that do not expire to accumulate points for a vacation down the road. You can use this card when traveling on business or making major purchases to make the miles add up faster. Then you might choose a card that pays a nice percentage back on grocery store purchases for everyday use.
The fundamentals of sound credit use also apply to your rewards credit card. Never make a purchase just because you get a reward. Do not charge so much that you can make only minimum monthly payments. Examine all factors involved with the card offer, including the interest rate. But if you choose and use your rewards card wisely, it can earn you some nice bonuses.
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