Despite the negative perception attached to credit cards by many personal finance gurus, we’ve spoken before about how when used sensibly, credit cards can actually be beneficial. Like most things, the key lies in finding a balance.
Credit card rewards are no exception. If you’ve managed to free yourself from debt and maintain a disciplined approach to using credit cards, it’s high time to make credit card companies work towards your advantage.
These companies thrive on competition, often positioning rewards to appeal to unsuspecting consumers. The marketing tactic here is to make you choose their card over others. Once enticed by the promise of reward points upon signing up, companies anticipate that users will continue to use the card, thereby accumulating debt and corresponding interest.
Contrary to what you might think from the generous sign-up bonuses, credit card companies continue to make substantial revenue from accrued interest. This is evidenced by the fact that the average US credit card debt is $15,611, as per Nerd Wallet.
However, you don’t have to contribute to this phenomenon. You too can successfully leverage the advantages of credit card rewards.
However, don’t fall into these common traps that credit card reward companies set:
1) FORGETTING THE ANNUAL FEE
Numerous credit cards waive off the annual fee for the first year. Most individuals intending to cancel the card before this grace period ends often forget to do so, contributing to the increasing clientele for these companies. It’s crucial to set reminders to cancel the credit cards if needed.
2) ACCUMULATING UNUSED POINTS
Several users harbour their points, aiming for a larger reward, yet never use them. These points are intended to serve you- to benefit you, not the other way round. It’s vital to be specific about how and when to use these points.
3) SIGNING UP WITHOUT MEETING BONUS REQUIREMENTS
Every card has varying spending requirements needed to earn the bonus. It’s important to understand these requirements and ensure that you meet them.
4) CARRYING OVER A BALANCE
Using cards irresponsibly by accruing debt distances you from the purpose of reward credit cards- saving money.
After understanding these points, it’s time to choose a suitable credit card accordingly. Depending on your preferences, there are several types of rewards such as travel, hotel, and airline rewards.
Here are some credit cards offering rewarding benefits to consider:
1) Southwest Airlines Rapid Rewards
2) Barclaycard Arrival Plus World Elite MasterCard
3) Citi Double Cash Card
4) Chase Freedom
Remember to consistently research and evaluate all available cards for the most savings, and avoid typical errors. As long as you adhere to disciplined credit card use, reward credit cards can offer numerous advantages.
