Americans can’t pass up a good bargain. That’s why we clip coupons and spend hours in line for Black Friday deals, and buy toilet paper and frozen foods in bulk. Many credit cards feature either cash back or rewards programs to “reward” you for using them with cash back incentives and rebate programs.
Yet when it comes to maxing out on credit card rewards, consumers are far less vigilant and determined. According to a 2011 study from Colloquy and Swift Exchange, the average household enrolled in a rewards program failed to redeem a third of the rewards they earn each year; including credit card rewards. Most don’t even realize they have points on their cards.
[RELATED: Keep Track of Rewards Points]
However, not all cards are created equal, even if they offer a similar type of rewards program. Here are five tips to help you use credit card rewards programs to your greatest advantage and avoid common pitfalls, such as leaving points on the table.
Choose the Right Rewards Credit Card
One of the best reasons to get a credit card is the ability to treat yourself to the perks of its rewards program. Get the most out of your rewards credit card by choosing the right one. First, make sure the credit card and rewards program you choose fits your financial lifestyle. If you travel significantly, a hotel or airline card is a good fit for you, and you can quickly accumulate bonus mileage and usage towards vacations. A Capital One or store card may be great for parents who are small business owners, and is valuable when purchasing supplies or to stock up the home office.
Consider Cash Back Credit Cards
For practical shoppers who like instant gratification and an uncomplicated rewards system, cash-back credit cards are a great option. Cash rewards are as easy and straightforward as rewards can get. Many cash-back cards come with numerous ways to redeem your rewards, such as checks, in-store cash, statement credits, gift cards or charity donations. Others will automatically deposit your rewards directly into your bank account. Cash-back cards can also involve a little advanced planning. While most cards offer 1% to 2% cash back, there can be restrictions or requirements; such as caps on spending in different categories or more rewards for purchases on dining, gas or groceries.
Know the Rules and Read the Fine Print
Rewards credit cards come in many flavors. Some require meeting a spending threshold before you can earn rewards or cap the amount of rewards you can earn in a certain period. The inconvenience of blackout dates for redeeming travel rewards are a standard joke for many would-be travelers. Know the rules, because ignoring them could mean disappointment and lost opportunities. For example, some cash-back rewards programs have rotating categories that require quarterly registration. Therefore, consumers have to pay keen attention to fully take advantage of their credit card.
Look for Bonus Opportunities
Sometimes you will need to enroll in these quarterly cash-back specials, so be on the lookout for special mailings or online alerts to register. Also keep an eye out for opportunities to double or triple your rewards earnings power. Many issuers offer an increased cash-back return rate every quarter or season in certain categories. For example, some issuers will reward travel purchases more during the winter holidays.
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