How to Take Advantage of Credit Card Rewards

What are credit cards? Well, most people have one, while to others, it is just a piece of plastic for paying in a machine and making money appear out of thin air and disappear just as first. However, credit cards are more valuable than that. Did you know that credit can be your only ticket to free flights, precious hotel stays, or even cash? Well, don't panic, welcome to the world of credit card rewards, where every swipe brings you closer to your next adventure. By the end of this article, you will learn more about credit card rewards and how to take advantage of these rewards.

What are credit card rewards?

Credit card rewards are perks offered by credit card companies to entice you to use their card and, just as the tern credit, spend more of their money. Isn't that cool? Spending your future salary Now. However, if you use your credit card and play your cards right, you will turn your daily purchases into sweet deals.

Types of credit card rewards

There are different types of credit card rewards that you can enjoy as a credit card user, which include:

Cash back rewards

This is one of the most popular types of reward that you can enjoy. In this type of reward, you spend money and get the money back.

Points

This type you acquire accumulatively as you continue to use the credit card. To get the reward, you can redeem it for goods, gifts, or travel tickets.

Miles

Also known as airline miles or travel points. Here, you earn a certain number of miles for every dollar you spend.

How to choose the right rewards card

Well, to enjoy credit card rewards, you have to be very cautious while choosing your credit card, as not all companies offer rewards, and some are better than others. Well, choosing a reward card is like choosing a life partner; you want someone that fits your lifestyle and helps you grow financially. Here are some of the considerations that you should check:

Your spending habits speak highly of the credit card you should get. If you are a foodie, you want to look for a credit card with restaurant rewards. Similarly, if you are a stay-at-home person and don't like travelling, a card with grocery rewards is your cup of tea.

Your travel style: If you are always on the go, a travel rewards card should be your best friend.

Annual fees—Some cards also charge a yearly fee for the privilege of using them. You should ensure that the rewards earned outweigh the yearly fee.

Your credit score – A good credit score translates to better rewards. With a high credit score, a primary credit card will serve you better.

Tips and Tricks to maximize your credit card rewards

Congratulations! For having acquired your brand-new rewards card, it is time to make it work for you. Get ready for the numerous rewards with the following pro tips:

Use your card regularly

To enjoy the credit rewards, use your credit card for every purchase you make. The more you use it, the better your chances of getting the rewards. Whether you are paying for that morning coffee or that Netflix subscription, put it all in your rewards card. The only disclaimer is that you should pay it off each month!

Take advantage of sign-up bonuses

The majority of the cards offer juicy bonuses for spending a certain amount in the first few months. So, make sure to grab these bonuses.

Have a consistent check-up on the special promotion

Card issues often have a surprise sale, but for rewards, they run limited-time offers with extra points for specific categories. Always follow up to find out if you meet the requirements to get this type of offer.

Use your present rewards

With credit card rewards, it is either you use them or lose them. Points and miles are meant to expire after a specified time. 

What should you watch out for?

Even as you celebrate and use your rewards, you should keep some potential pitfalls in mind.

Interest rates—Credit cards are simply loans, and carrying a balance over to another month attracts interest. This may result in the payable amounts outweighing any reward that you earn. Therefore, always pay your balance in full and on time.

Reward caps – most cards limit the rewards that you can earn in specific categories, so make sure to read about them in the credit card manual.

Changing terms—Credit card rates are subject to constant change, and credit issuers may adjust their reward programs at any time. So, stay up to date about the card’s current terms. Do not assume anything.

Credit cards are, in most cases, your best friends, but they can also be your worst enemy as they are very addictive. Remember that you are using borrowed money, and you can fall into the trap of "I am earning rewards, and to get more rewards, I should spend more." Fortunately, that's what the credit card companies are banking for. If you don't spend, they may be out of business.

With credit cards, you need to be very disciplined. Remember that rewards are meant to be a bonus for money you would have spent, not an excuse to blow your budget. To survive with credit cards, treat them as you would a debit card, only spending the money you actually have.

After you have earned your rewards, it is time for the fun part—spending them. Below are some of the ways you can maximize your redeemed points.

Know the value of your points—your points rewards come in different values. Take your time and calculate the real value of your points to avoid getting false rewards.

Look for transfer partners. If you do not want to use the rewards in the described manner, the travel card allows you to transfer points to an airline or hotel and receive cash at good rates.

Save up for a huge redemption—although it is tempting to cash in your points for smaller redemptions, always target saving up for bigger rewards. Of course, this should be within the timeline of your reward before it expires.

Credit card rewards are indeed a fantastic way to earn something extra: free air flights or a night in your dream hotel from your daily spend. However, keep in mind that the best reward is your financial health. So, be responsible while using your credit cards, and pay off your balance monthly and on time; only then will you be able to enjoy your card rewards; be smart. Now, if you excuse me, I have a plan to catch, those miles are not going to redeem themselves.

Q1. Do credit card rewards expire?

Ans: It depends on the card and the reward program. Rewards, like miles of specific airlines, can expire if there is no activity on your account for a period.

Q2. Are credit card rewards taxable?

Ans: Credit card rewards are not taxable and are considered rebates on purchases you have made and not income.