Maximizing credit card rewards in this environment of reward cutbacks is tricky at best. But here are a few tips that can help you leverage rewards no matter how bad the general market conditions are.
Reward Credit Card Tip #1: Follow the KISS Method (Keep it Simple Silly!)
When looking to maximize your card rewards, "keeping it simple" is always the best policy.
- Know what kind of rewards you want. Earning a first class airline ticket when you have never flown first class is typically not a good reason to select a card that touts first class airline rewards. A better alternative is to have a card that offers rewards that are part of your normal monthly expenses, such as gasoline or food shopping rebates.
- Limit the number of cards you use. The easiest way to manage your rewards is to just use one reward card for all your purchases. There are situations where it can make sense to use multiple cards (experts never recommend using more than two cards at once), but those situations are fairly limited.
- Stay on top of your rewards card policy changes. As of late, account changes seem to occur on a fairly regular basis. This is another reason to limit the number of reward cards you use- keeping it simple makes changes easier to follow!
Reward Credit Card Tip #2: Never Carry A Balance...Never
Cardinal rule #1 involving rewards credit cards is that you should never carry a balance...never. Reward cards typically carry higher interest rates (than "plain jane", non-reward cards). This is especially true as of late with the high interest rates we are witnessing. Pay off your balance monthly and also stick strictly to your monthly budget.
Reward Credit Card Tip #3: Cash Is King in Today's Market
Cash back credit cards offer the most flexibility and often the least restrictions of any type of reward card. That is why cash has always been king, but even more so in this enviornment of diminishing credit card rebates and growing disdain for airline frequent flyer programs.
Curtis Arnold, Founder of Cardratings.com, likes the Schwab and Fidelity cards and warns that you should not just settle for a 1% rebate card. Some cash back cards sill offer up to 5% on certain types of purchases in popular rotating categories subject to quarterly enrollment and quarterly spend caps.
Reward Credit Card Tip #4: Choose Automatic Redemption When Possible
Usually this takes the form of an auto credit to your account on a periodic basis, but a few issuers still mail actual physical checks! This cuts down on the hassle factor since you don't have to call or go online to redeem your rewards.
If manual redemption is required, don't hold on to your rewards without good cause. There is too great a chance of forgetting them or of them losing value. Get in the habit of cashing in your reward points unless you're holding them for a specific reason. And, be sure to check your reward redemption policy to insure you know your fully understand the process prior to applying for any card.
Reward Credit Card Tip #5: Tips from a Frequent Flyer
While I'm not crazy about airline credit cards, many consumers still insist on using them. Kate Thome, who blogs on CardRatings.com, has some great tips for those of you who like these type of reward credit card offers. Kate is an experienced domestic and international traveler.
- Find one program and stick with it.
- Link airlines to everything possible--groceries, anything. One perk in the frequent flyer market is that you can sometimes earn "miles" or "points" (points can often be redeemed later as miles) for other travel and non-travel transactions. Travel transactions can include hotel stays, rental cars, and more.
- Make certain that as many points as possible from various programs are consolidated into one main account. For example, Kate has her Hilton points, Marriott points and Hertz points all defaulted to go to her United Airlines miles account. This helps keep tabs on all of point balances without having to check all of your accounts all of the time. Also, you might not have to wait as long to hit redemption levels.
- Use your rewards for super-expensive tickets such as those for a special event. This maximizes your points.
- Sometimes you can transfer airline miles to hotels so be on the lookout if needed.
Making the most of your credit card rewards is both an art and a science. But if you follow the above tips, the art will be paint-by-color and the science elementary. Good luck!