Make Credit Cards Rewards Work For You

Credit card reward programs can be an excellent way to bring in a little extra money or perks. Roughly 50% of credit card offers feature some type of rewards program - free airfare, cash back, gift cards and merchandise. Of the different reward cards, the most popular programs are cash back, with customers earning a percentage of their purchases in either a check or rebate to their account. Other reward cards rack up "points" which can be redeemed for various items or offer discounts at hotels, stores, restaurants and gas stations.

The competitive nature of the credit card industry is the driving force behind these programs, not necessarily a desire to please their customers. But consumers can make reward cards work by following a few simple rules.

No Balance is a No-brainer
The most obvious and important point is to never carry a balance - pay your entire balance each and every month. Working to earn rewards only make sense if there are no interest, penalty or annual fees eating up any rewards you are trying to earn.

Analyze Spending to Reap Big Rewards
What type of spender are you? Are you a traveler who would benefit from airfare or hotel rewards? Do you spend a lot on groceries or gasoline? The idea is to line up your credit card spending with the type of lifestyle you live, resulting in bigger rewards. Someone who lives in an urban area and gets around by bus or taxi is not going to make many rewards using a gas reward card, for example.

Favor Cash Back
Points often end up unused - a plus for the credit card companies. Cash back rewards accumulate without the need to remember or having to do anything. Plus, cash back cards tend to offer better rewards than point equivalents.

Keep it Simple
Keep active accounts to a minimum. You may be tempted to try several types of reward cards, but not only will this have a negative impact on your credit score, you'll lessen your chances of earning big rewards. Juggling more than one account may also put you at risk of allowing reward points to expire. If you miss an expiration date, you could lose all your points, when all that may have been required was a small purchase to hold them. And always look for a card that carries no annual fees and with the lowest APR you can find.

Look for Alliances
Look for preferred partnerships that can increase your reward opportunities. Airlines, hotels, car rental agencies and other companies may honor each other's reward points. Consider opting for cards that will earn rewards at stores and services you use most often, or offer savings on items that you actually buy regularly. Airline and hotel discounts, for example, are not particularly useful for those who aren't frequent travelers.

Work toward a Goal
Choose a reward to work toward. The biggest benefit comes when a card is used extensively for earning points. Of course, it is never wise to use a credit card frivolously just to reap the reward; that is, unless you are able to continually pay off the balance each month. Before you cash it in, take the time to understand the redemption structure for optimal rewards.

Rewards Have Their Limits
Some reward cards also carry annual fees, making it even less likely that you will come out ahead. Make sure you understand the maximum earnings that are allowed. If, for example, your gasoline card gives you 5% cash back on gas purchases but is limited to a maximum of $300, you'll be wasting the opportunity to earn rewards with another type of card.

By: ASAP Credit Card

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