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Unlocking the Power of Credit Card Rewards: Tips For Maximizing Perks

Rewards credit cards, when used wisely, can help you get more for your everyday purchases. Whether filling up a grocery cart or your gas tank, it’s an opportunity to earn points, miles, or even cashback, depending on the card you use. Over time, these perks can add up, but only if you know how to maximize your benefits. If you want to unlock the power of your credit card rewards, follow these simple tips.

1. Find a Rewards Credit Card That Fits Your Lifestyle

All rewards credit cards are not created equal. Different cards offer different perks, so finding one that matches your lifestyle and spending habits is crucial. It is important to identify the areas where you spend the most money and select a credit card that rewards spending in those areas. For example, if typically reserve your credit card use for large purchases, you may want one that offers a generous cashback option. Conversely, a card with boosted points or miles for travel may be better suited to you if your wanderlust is still in high gear.

2. Take Advantage of The Sign-Up Bonus

Numerous credit cards offer attractive sign-up bonuses that have the potential to yield substantial rewards. Generally, you’ll need to fulfill specific criteria within the initial months of account activation. Most credit card issuers mandate that you must reach a designated spending threshold during the initial period to qualify for the sign-up bonus. This is typically between $500 and $5,000, depending on the card.

To secure your eligibility, meticulously review the terms of the bonus offer and align your spending habits accordingly. Once you fulfill the requirements, you can use the cashback or points to pay down your balance (if allowed), offset a large purchase, or take a trip. Another bonus is that your rewards are tax-free because they are considered a rebate and not income. Cha-ching!

3. Explore All The Available Card Perks

Apart from earning sign-up bonuses and rewards such as points, miles, or cashback, most rewards credit cards enhance their appeal by providing additional perks. Travel credit cards, for instance, may include benefits like access to airport lounges, credits for cruises, and even insurance coverage for lost or delayed luggage. Additionally, cardholders often enjoy discounts on Global Entry or TSA PreCheck.

Other perks for rewards cards may include:

It’s worthwhile to consider the additional perks and benefits when selecting a card, as these benefits can often save you money on things you may be buying already.

4. Check For Limited-Time Offers

Many credit card issuers have limited-time offers where you can get extra perks or earn extra rewards, especially around the holidays. For example, you might get complimentary access to entertainment venues or up to 10x points on dining reservations made through your card’s portal. To ensure you’re not missing out on these deals, enroll in email and SMS communications.

5. Understand The Value of Your Redemption Points

Most credit cards offer multiple ways for you to redeem your reward points, such as cashback, travel, merchandise, or gift cards. Your points, however, are not worth the same in every category. You’ll want to crunch some numbers to ensure you’re getting the best value for those hard-earned points. To calculate your point value, use the following formula:

(item value ÷ points needed to redeem) x 100 = point value

Generally, gift cards are the least valuable option for redeeming points. On average, you’ll get around a quarter (1/4) of a cent per point. Cashback and airline tickets offer the best return on rewards, typically averaging more than a cent per point. With a little pre-planning and math, you’ll be able to get the highest value possible.  

6. Stay Within Your Budget!

The most important tip for maximizing your credit card rewards is to stay within your budget. If you’re making excess purchases to meet your sign-up bonus or earn extra rewards, it will all be for nothing if you leave a large balance on your card. That’s because the interest accruing will negate any benefit you may receive. To truly unlock the power of credit card rewards, you’ll not only want to meet the requirements for your offer, but also pay off your balance in full each month.

Bottom Line

Sticking to a budget and finding a credit card that aligns with your lifestyle can help you get the most rewards possible without jeopardizing your financial well-being. Take advantage of sign-up bonuses and limited-time offers to maximize your earning potential, and don’t forget to check out any additional perks. If you stay focused and refrain from over-extending yourself, your credit card can truly be rewarding.