Are you a fan of credit card rewards? Join the club. Many people find gratification in earning and redeeming their credit card points. I believe that if you can manage your cards sensibly to prevent debt, you should definitely exploit the benefits of these perks. It’s a given that the most enticing rewards credit cards are often available to people with good credit scores.
If you’re seeking ways to maximize your rewards, this is the right place for you. Credit card rewards can be beneficial if you understand how to get the most value from your points or cashback. In this article, I’ll go over both the best and worst ways to redeem your rewards.
POOR WAYS TO REDEEM CREDIT CARD REWARDS
Let’s begin with the least productive methods, and then we will discuss the most effective ways. There are rights and wrongs to maximizing your credit card rewards. Here are some of the awful ways to redeem your points or cashback, which might result in fewer returns than you could have obtained with your points.
MERCHANDISE
You could exchange your points for goods through the partners of some credit card companies. Some of these partners might be popular retailers or places where you usually shop. However, this method might not give you good value. I learned this when I, once, shopped through the partners of my credit company using my points. Although it was easy, the value I received was poor. The better ways to redeem credit card rewards, as detailed below, show that this method might not yield much value.
PAY WITH POINTS OR STATEMENT CREDIT
Some credit cards allow you to use your earned points for a statement credit. For instance, with American Express, you can make purchases with your points. However, this might not yield great value either. Essentially, you should be able to fully pay off your credit card every month to earn rewards. Do not rely on points to help with bill payments. Only spend what you can comfortably clear. Then the rewards will seem like a bonus.
CASH BACK ON A TRAVEL CARD
While I appreciate cashback cards, I would not advise you to try getting cashback on a travel card. It’s sensible to use your travel cards on travel-related expenses to fully stretch your points. For example, the points you win on your Southwest Rapid Rewards should ideally be used on Southwest flights.
Traveling can be expensive, so if a card is giving you 50,000 reward points equal to $500 in travel charges, you should definitely grab this opportunity. Aim to use cashback rewards cards purely for cashback, more on this below.
BETTER WAYS TO REDEEM CREDIT CARD REWARDS
Here are some of the more advantageous ways to maximize your rewards.
EARN UNLIMITED CASH BACK
I’m a fan of cashback credit cards. However, some of these cards that have specific spending categories and limit rewards feel perplexing. Cards like Discover, for instance, offer 5% cash back, but limit your rewards to $1,500 and restrict which categories are eligible. But I do appreciate how it matches your rewards for the first year. In the long run, you may want to consider an option like the Citi cashback card which has no caps or spending restrictions.
CASH BACK VIA DIRECT DEPOSIT
Getting your cash back via direct deposit usually proves to be the best method. Some cards offer a statement credit or a gift card, but I believe that having the money deposited in your account gives you the freedom to spend it as you wish.
FLIGHTS AND HOTELS
Even if you only plan to take one vacation per year, redeeming points for traveling can save you a significant amount of money. In the past, I have used reward points to secure big discounts on cruises, and I enjoy using the IHG Rewards card to earn points on hotel stays. The card also offers a free 4th night for bookings and a free anniversary night every year. These perks make the moderate yearly fee worthwhile.
What’s your preferred method of redeeming credit card rewards?
