Making The Most of Rewards Credit Cards

In the wide world of credit cards, the reward card is a major player. Every industry has some form of rewards card from airlines to car manufacturers and even the government - to a certain degree. Many rewards cards come with great benefits, but only if you're willing to pay the annual fee charged by the issuing bank. And most important of all - a rewards card is only as good as the rewards you take advantage of.

Take Advantage of Credit Card Rewards

A startling number of credit card consumers simply don't take advantage of their rewards accumulated over time. This is especially surprising as it costs a fee to use most rewards cards, but the fee should be justified by the rewards. When you don't take advantage of your accumulated credit card rewards, you're paying a fee to use a credit card that does nothing for you. You would have been far better off with a no annual fee credit card with a low interest rate.

The Fine Print of Reward Cards

To properly take advantage of a reward credit card, you must know how to accumulate the rewards and any limitations on using what you earn. For example, many credit cards discuss "qualified purchases" as being the means to accumulate rewards. If the card does not go on to explain what makes a particular purchase qualified, strongly consider finding another card that is clear on the rules and expectations of the particular program.

Another important note is how the rewards can be used and when or if they expire. If, for example, you're accumulating miles with an airline miles credit card, you might only be able to cash in your miles for free travel on non-peak times or months in advance. If this suits your needs, there is no need to skip the card completely, but realize that another airline or even another general rewards credit card might have a better mileage system which is more flexible.

If you're able to continue accumulating miles over the course of a few years, non-peak travel times are probably not as important as you can accumulate enough miles to take a full vacation somewhere exotic rather than fly to the in-laws for Thanksgiving for less.

If, however, your flight (or other) rewards expire at the end of the year, the restrictions on travel dates have a greater impact. You'll likely be trying to arrange travel over the holiday season before your miles expire, but those are the very same days that will be restricted. Understand what you're getting into and then plan ahead accordingly.

Max Out Advantages

When using a rewards credit card, you have every incentive to max out your spending on the card. This doesn't mean you have to run up huge balances you have no hope of paying off. Instead, max out your rewards by charging things you would normally pay cash or write a check for. Just be sure they are "qualified purchases." Then, when the balance comes in, simply use the cash still sitting in your bank account to pay the higher balance. No interest accrues and you stand to gain a considerable amount in rewards.

Consider charging items like college tuition, taxes or fees, and large ticket items such as recreational equipment. You can even charge some of your monthly bills such as telephone, electricity and cable. The more you charge, assuming you are able to pay off the balance each month and avoid paying interest, the faster you'll reach the rewards goal you're seeking. Just be sure to actually cash in on the rewards you've spent so hard for.