If you are like most people, you have several different credit cards, and each of those credit cards probably has some kind of distinct rewards program. Whether it be money back, earning points, or some combination of the two, it can be confusing to understand how to get the most out of your cards.
Here are a few tips to help you get the full benefits out of your credit card rewards.
Pay Down Your Balance
If you are unable to pay off your credit card each month, the first thing you should do is try to use the rewards to pay down your balance. Not all cards allow you to do this, but many do. If you are able to pay down your balance with your rewards, just do it. There is no point in paying interest on your credit card balance (especially at credit card rates) just to have a few extra dollars to spend. This should be your first choice if you have the option.
Opt for Gift Cards
Many credit cards give you the option to purchase items directly from online retailers using the points you have earned. However, if you choose to purchase things directly with points, it can often cost you more points than if you just get a gift card to that same retailer and pay that way. The general rule of thumb is that one point should equal one cent. So, if you have earned 5,000 points, you have $50 in rewards.
Many times, if you purchase directly through the online retailer with your points, they will charge you more points for the item (For example, a $50 item would cost 6,000 points) than if you were to simply get a gift card to that retailer and pay separately. This is usually fairly simple to figure out by doing a little math.
Build Your Credit to Get Better Rewards
There are many different types of rewards cards out there – each of them with different levels of rewards. Not surprisingly, people with better credit and longer credit history often get cards with better rewards. Because of this, as you build your credit score and history, you have the opportunity to apply for and receive cards with better rewards. Doing so can give you even more rewards for the money you are already spending.
Credit cards that offer rewards can be a great way to earn money back on the purchases you already make. However, it’s important that you pay off your credit card statement every month. If you find yourself carrying a balance, be sure you stop using that card until you have paid it off. The 1% or 2% in rewards you receive isn’t worth paying 10%-20% in interest.
If you have questions about credit cards, feel free to ask a Member Advisor in one of our branches or give us a call at 800-835-3400. We are here to help you on your financial journey!