Benefits of Credit Card Reward Points
As the credit card
industry continues to increase and competition abounds,
there are more and more financial institutions offering
rewards and incentives to customers. Earning these
rewards through points based on your usage is a great
way to maximize the value of the card, if you don’t
abuse it.
Selecting the right card for your use in maximizing
these benefits is crucial. First, select one that
does not charge an annual fee – the fee could actually
total more than a year’s benefits, depending on the
frequency of use. Second, to get the best benefit,
it’s best to pay the balance every month. If you
can’t select, find a card with a low annual percentage
rate (APR). Although there again, the total
interest you pay in a year could easily outweigh any
reward points that are earned. So, use wisely.
Credit card incentives started years ago by offering
frequent flier miles to specific airlines, giving the
user the opportunity to earn free airline tickets.
Today, most cards let you accumulate points based on the
value of purchases, and these points can be used for
anything from air fare to restaurant vouches to cash
back.
The points are based on the dollar value of every
purchase and while its fun to see the points increase;
the value of the point needs to be taken into
consideration. For example, if points are
point-per-dollar, in order to earn 5,000 points, you
have to spend $5,000. However, most points are
valued at a 50 or 100 points per dollar spent, so they
add up more quickly and the chances of reaching your
chosen “perk” in a reasonable amount of time are good.
The key is to investigate the card carefully before
selecting the one for you.
The fine print on these reward cards is important as it
may disclose an expiration period for points (one year,
for example) or may only be redeemed during a certain
time of the year (redemption period of 1-2 months).
Watch out for cards with too many restrictions as they
may be more costly than the benefit they propose.
One way to quickly accumulate reward points is to use
your card for everyday purchases, like gas, groceries,
and prescriptions. Then pay the balance each month
from your checking account like you would have used to
originally pay for those purchases. If you are
planning a major purchase and can take advantage of the
credit card points, then by all means do so.
However, don’t put yourself in excessive debt just for a
few more points.
Earning the points wisely can be a fun way to get some
additional perks from your credit card. However,
you need to be financially savvy in order to get the
best benefit and to not fall into a trap of excessive
debt just for the sake of a few dollars in merchandise.
Quick Tip #1
Although it may be overstated, there is a lot of
truth to people ruining their credit score due
to missing payments and
paying their credit card bills late.The fees can
pile up and the interest rates can grow before
you know it.
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Quick Tip #2
Never let your
cards go out of your sight and always check your
receipts and your card statements thoroughly.
These are simple ways to prevent credit card
fraud happening to you. If you do see a
suspicious credit card statement,
then call your credit card company straight away
and cancel your cards. |
Quick Tip #3
Today’s cards
offer a wide range of excellent features,
including frequent flier points, programs that
bank points toward a new car
and cards that support charitable organizations.
Other options worth having include car rental
insurance coverage, trip cancellation coverage
and extended warranty coverage. |
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