Credit card rewards can be extremely useful, but there are several factors to keep in mind before redeeming them. These include point values, card costs and redemption options.
Reward programs typically enable you to redeem points and miles for merchandise, travel perks or gift cards. You could even earn additional points by meeting specific card requirements within a set time frame or spending an amount in a given timeframe.
Bonuses
When selecting a credit card, it is essential that it meets both your spending habits and lifestyle needs. A rewards card should complement rather than force excessive spending beyond what your means allow for; additionally, many cards have annual fees which could outweigh any rewards earned.
Credit card rewards points typically have an approximate value of one cent each, depending on the card and how they're redeemed. Some cards provide greater value when it comes to flights and hotel stays, among others.
Some credit cards allow you to earn bonus points when purchasing specific categories, like dining, travel and gas purchases. Others offer rotating categories every quarter - these categories can often prove lucrative but care should be taken not to overspend in order to maximize rewards. Your card issuer provides access to view and redeem these rewards via their online or mobile app platform.
Points
Credit card rewards programs with the best results take full advantage of your spending patterns without forcing you to alter them in order to earn points. Cards offering extra rewards in certain categories like travel or grocery can make an enormous difference for people who rely on those purchases heavily.
Tier earnings can also be effective, with cards earning more points in certain categories and less elsewhere. Some issuers also reward loyalty with bonus points each year on your account anniversary or when adding an authorized user, reaching certain spending milestones or meeting initial spending requirements.
Credit card points can be redeemed for merchandise, cash back, gift cards and exclusive events - the value of these rewards depends on your redemption options and annual fee of the card in question. Redeeming rewards early can maximize their benefits and reduce potential interest charges.
Miles
Credit card reward programs provide consumers with various perks, from cash back and miles back, to cards tailored for specific types of spending such as online shopping and grocery shopping. Unfortunately, however, some rewards cards come with annual fees which could negate any potential gains you might make through rewards programs.
Finding the ideal rewards card requires careful consideration of both your budget and spending habits. When looking for rewards cards, look for those offering high rewards rates in categories you spend most often and avoid amassing points or miles in unproductive areas.
Credit card rewards vary in value depending on how they're redeemed, with online portals usually being the easiest method of redemption for points and miles earned through credit card use. Other redemption options may include purchasing gift cards or merchandise; while some card issuers allow pooling of rewards points across accounts within one program. Ultimately, their worth depends on redemption options available to you and any breakage revenue recognized when left unused by card issuers.
Cash back
Credit card rewards can add extra flexibility to your budget by giving something back for purchases you were planning to make anyway. But high interest rates on balances carried forward from month-to-month can quickly offset any benefits of rewards earned.
Many rewards cards allow you to tailor your earning rate based on how much you spend in specific categories, such as gas, groceries, online shopping and travel. Some even feature rotating or customizable cash back categories which you can switch each quarter for additional earnings potential.
If your chosen card enables you to choose among various spending categories, ensure it corresponds with your shopping habits. In addition, look for one with a generous welcome bonus in exchange for meeting minimum spending requirements in a short amount of time. Make it a point to pay off balances in full each month to avoid incurring interest charges which could quickly negate any rewards earned on that credit card.
