5 Things to Know to Maximize the Potential of Credit Card Rewards

Beating the credit card companies at their own game is not necessarily that hard. You have to discipline yourself a bit and act as you would do with cash — as in not buying stuff you don’t really need. Also, you should make regular monthly payments, and use the points or cash back earned wisely. Here are 5 things you should know to maximize the potential of credit card rewards.

1. Do NOT overspend

The fact that you will be earning points or cash back on your credit card use should NOT force you to buy the stuff you don’t need. Points and little cash you will get back on every purchase are not worth busting your budget. Credit cards with rewards are best used for purchasing products and services you would be buying anyway. And getting something back for every dollar spent comes as a bonus.

2. Pay as much balance as you can every month, and pay on time

By paying on time you will avoid late fees and higher interest rates. On the other hand, by NOT paying on time, a credit card issuer can forfeit your rewards — for instance, American Express does this. Related to that, if you pay more than monthly minimum, you will avoid paying interest. And that should be the point — to get as much points or cash back from the credit card usage without having to spend too much on interest payments.

3. Get the card that matches your spending

Getting a credit card that offers cash back for gasoline purchase may not be useful for someone living in the New York City where most people rely on subway for their daily commute. To get real benefits, go for the card that will reward purchases you are already making to turn them into a rewarding experience.

4. Pay attention to limits

Big percentage of cash back typically comes with a limit. For instance, some cards offer up to 6% cash back that is capped at $6,000 after which the percentage drops to 1%. Knowing this could push you to use a different card once you reach the 6% limit. That other card may offer 2 or 3 percent back at grocery store purchases.

5. Shop around and play the field

Don’t visit one bank’s website to select the card — shop around and find the one that works best for you. Also, remember that you don’t have to opt for a single card; instead, you can — for instance — get one card for gas, one for groceries and one for travel. This way, you will create a mix of cards that will reward pretty much every purchase you make. That’s the way we roll. 😉

Ready? Get, set, go!

Now that you have mastered the basics, you are ready to take the next step and get the card, or more of them, that reward(s) your existing purchases. That way, you will turn your regular shopping into reward experience. Comparison shop as much as you can; and start by checking out some rewards cards below.