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6 Ways to Make the Most of Your Credit Card Rewards

Rewards credit cards offer not only convenience but the potential to earn some major perks like free travel, merchandise, gift cards or even cold hard cash. The smarter you are about using your card, the bigger the payoff will be. Before you pull out the plastic, take a look at these six strategies for making the most of your credit card rewards.

Find out now: What card is best for me?

1. Pick a Card That Fits Your Spending Style

You wouldn’t buy a pair of jeans without making sure they fit. The same is true for a rewards credit card. When you’re shopping around for a card, it pays to look for one that fits your spending style. If you regularly charge things like groceries and gas, you’ll want to find a rewards card that offers cash back or points for everyday purchases. If you spend a lot of time on the road, you might be better off snagging a card that lets you earn points towards free gas, hotel stays or airfare.

2. Take Advantage of the Sign-On Bonus

6 Ways to Make the Most of Your Credit Card Rewards

In an effort to draw in more customers, some credit card companies will give you a bonus just for opening an account. Depending on the type of card you get, the bonus could consist of extra reward points or cash back. Typically, you have to make qualifying purchases in order to get the bonus so it pays to do your research before you sign up. Just be careful not to fall into the trap of signing up for multiple rewards cards to get the bonus. You run the risk of racking up debt and ending up with a wallet full of cards you don’t really need.

3. Know the Redemption Rules

Earning credit card rewards won’t really do you any good if you don’t know how to use them. Before you sign on the dotted line, you need to understand what you can and can’t use your rewards for. For example, if you’ve got a travel rewards card you need to know whether there are any blackout dates or restrictions on when you can book flights or hotel rooms. It also pays to know whether your credit card rewards expire, if they can be transferred or traded and if there’s a limit on the amount of rewards you can earn.

4. Redeem Rewards Wisely

Some credit cards limit you as to how you can redeem your rewards. For instance, if you’ve got a straight cash back card you won’t be able to convert your rewards to anything else. There are, however, some cards that give you more flexibility when it comes to redemption. For instance, you may be able to choose whether you want to use your points for travel, shopping at selected retailers, gift cards, statement credit or even charitable donations. When you’re trying to decide how to redeem you credit card rewards, you want to look at which option gives you the biggest bang for your buck.

Related Article: 5 Tips on Redeeming Credit Card Points and Miles

5. Pay Attention to the Extras

Rewards credit cards aren’t just for earning points or cash back anymore. Now credit card issuers are offering tons of free extras that can add up to big savings. Extended warranty coverage, travel insurance, product protection, rental car coverage and price guarantees are just a few things that you may be able to take advantage of as a rewards card user. Some cardholders can take advantage of things like free concierge service, discounts on vacation packages and VIP access to sporting and entertainment events. If you’re looking to get a little extra mileage out of your rewards card, it pays to look for one that offers the most value.

6. Don’t Skip the Fine Print

6 Ways to Make the Most of Your Credit Card Rewards

If you’re not reading the fine print when you sign up for a rewards card you could end up costing yourself money if you’re not careful. Some of the things you want to look at before you sign up include the fees, APR and promotional rate terms if they apply. Some credit card companies will offer to waive the annual fee for the first year or give you a lower introductory rate for a certain period of time but if you don’t understand the terms you’re agreeing to, you could be in for a nasty surprise when the promotional period ends. This can undo all the benefits of the credit card rewards you are earning.

Related Article: 4 Expenses You Should Never Put on a Credit Card

Photo Credit: flickr, ©iStock.com/South_agency, ©iStock.com/FatCamera

Rebecca Lake Rebecca Lake has been writing about the nuts and bolts of personal finance for nearly a decade. She is an expert in investing, retirement and home buying topics. Her work has been featured on The Huffington Post, Business Insider, CBS News, U.S. News & World Report and Investopedia. As a homeschooling mom of two, she's always looking for ways to make the most of every dollar.
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