Get The Most Out Of Your Rewards Credit Card

Of the nearly 200 million credit card holders in the U.S., approximately 60% have rewards credit cards. But it’s estimated that almost a third of these cardholders lose out on valuable rewards. Want to know how to accumulate rewards and cash them in for big savings? Read on.

1) Understand the Rules

It’s hard to successfully play the game if you don’t know the rules. And while using rewards credit cards certainly isn’t a game in the real sense, getting the most out of your card does involve being aware of what you need to do to maximize your rewards.

Typically, the best rewards programs are linked to cards that require very good to excellent credit (700+ FICO score). The following rules and fees often apply to these rewards programs so the savvy rewards cardholder will know and understand them.

  • Spending Thresholds – Some credit cards require new members to spend a certain amount on the card within a specific time frame in order to receive the signup bonus. With other cards, members can earn the bonus once they make an initial purchase.
  • Registration Requirements – Many times when a rewards credit card offers rotating bonus categories (usually 5%), members have to register in order to receive the extra rewards. Often these rotating categories change every quarter which means that every three months you have to register for the upcoming bonus rewards categories. If you forget, your purchases will most likely earn a meager rewards rate of 1% or 1 point.
  • Rewards Restrictions and Limitations – Rewards credit cards frequently require you to have earned a certain amount of rewards before you can redeem them (such as $25 in cash back value).
  • Penalties – If you ever miss a payment or your account becomes delinquent you may lose any rewards you have accumulated.
  • Changing terms – Credit card issuers are required to notify you when there is any change to the terms and conditions of your account. Make sure you read any notifications you receive and are fully aware of the changes.
  • Fees – If you are paying fees (interest charges, annual fee, etc.) they may be negating any rewards you are earning. The best way to maximize rewards is to never carry a balance on your card.

2) Know the Types of Rewards Credit Cards Available

Here are the types of rewards cards being offered in today’s market. Check your spending habits and then find the card that best suits your lifestyle.

  • Cash Back – Cardholders generally earn 1% – 6% cash back on eligible purchases.
  • Travel Rewards and Air Miles – These rewards are earned as points or miles on purchases and often earn bonus points or miles on specific travel-related purchases. These typically include hotels, airfare, car rentals, cruises, and train tickets.
  • Points – Members earn points on purchases which can then be redeemed for merchandise, cash back, statement credits, or gift cards.
  • Rewards – These credit cards are usually merchant-specific. This means you earn cash back when you shop at a certain retailer or make purchases in specified categories such as groceries or gas. Many times these categories rotate every quarter but not always.
  • Special Interest Cards – These may include military rewards cards or certain charities.

Know the Redemption Options

Here are the most common redemption options.

  • Statement Credits – Rewards you earn are applied to your account as a statement credit.
  • Cash Back – Rewards can be redeemed as a statement credit, deposited into an eligible checking or savings account, or as a check.
  • Travel or Airline Miles – Rewards are redeemed towards travel related purchases and/or upgrades.
  • Gift Cards – Points or rewards can earn gift cards from popular retailers.
  • Merchandise – Some rewards programs have their own online shopping mall where you can select merchandise.
  • Donate – Certain rewards cards are affiliated with specific charities and rewards can be used as donations.

Note: Always pay close attention to your rewards statement that should be included with your credit card bill each month. Make sure you are earning all the rewards you signed up for!