A Guide To Rewards Credit Cards
Most people passionate about travel would have probably come across YouTube videos wherein couples travel the world without spending much. This leaves the viewers often asking “how do these people manage to travel for a living?” The answer invariably is credit card rewards or points.
From a financial perspective, it’s sensible to substitute travel expenditure (cash) with points. Irrespective of what your travel objective is – business, vacation, or the desire to see the world – rewards credit cards make complete sense. That said, these rewards are not just for traveling.
You can even earn cashbacks and save them for retirement or to pursue some other objective.
Ensure A Respectable Credit Rating
Without a credit card, you cannot earn rewards or points. So apply for one if you don’t own one already. But before you apply for a credit card, make sure your credit rating is good. If you’re not sure about the same, get a free yearly credit report done. The majority of banks account credit scores to ascertain an individual’s creditworthiness.
If you don’t pay credit card bills on time and incur interest charges monthly, card rewards or points should not be your priority (at least for the time being). Credit card points are for people who do not accrue credit card interest charges.
To get in line for these rewards, you must pay card bills every month, have basic levels of savings, and be budget-conscious and generally organized. There are specific cards that can help build your credit rating, but these usually come with a high interest charge, but as long as you pay them off in full every month then your credit file will start to improve.
Have A Goal
If you’re not certain about what you want to derive from your credit card, you would end up buying any random card and not generating sufficient value out of it. Most people get aboard the rewards game for travel points or cashbacks, or both. Travel points should be your pick if you travel frequently and cashbacks if you shop quite often. However, there are people who don’t mind travel rewards but don’t have a travel schedule in place.
Without concrete travel plans, planning beforehand for the cards and points could be difficult. But if you’re looking at these cards from a long-term perspective, you would be a lot more efficient with those cards. While you’re assessing your goals, consider upgraded experiences such as first-class travels and suites. Maybe you want to further stretch your points and have a lot more stuff free of cost.
Choosing The Right Card
Having a powerful card with major sign-up bonuses or rewards is probably the easiest route to kick-start your rewards strategy. Make sure your credit card helps you save money irrespective of what your nature of expense is. In other words, ensure your card provides the highest rewards possible on a range of spending categories.
Choosing the credit card type depends on the rewards or points you value the most. For people who prefer 0% balance transfer, cards offering transfer deals only would be more suited If you prefer air miles, double-miles cards would be right.
And then there are also cards that offer savings as cashback on food or grocery shopping, fuel, bad credit catalogues etc. There are fuel cards that offer savings up to 5 percent. The task, however, is to find such cards.
Sign Up for Loyalty Programs
If inexpensive travel is your goal behind collating credit card rewards, you must seriously consider getting on to those loyalty programs. There are different loyalty programs and the one you choose should be based on your travel habits and preferences. For instance, if you reside in a particular city and fly a specific airline frequently or book regular holidays with credit cards, it makes sense to sign up with that airlines’ program.
You can even sign up for loyalty programs offered by hotels. There is usually no cost to sign up for these programs, and therefore there is no reason why you should not be getting on-board with multiple programs simultaneously.
Dining programs usually make it easy to double-dip, meaning you would earn rewards for both a credit card payment and miles bonus or points via the dining program for having dined at a particular participating restaurant. Many hotel chains and major airlines provide dining programs in conjunction with their loyalty programs.
The ideal option would hinge on the currency you want to earn those loyalty points in. Also consider the restaurants that are part of the various programs. Pick one that rewards for dining at the restaurants you prefer. And do not forget to link your card that gets you bonus points on restaurant spending.
Maximize Your Purchases
Just owning various cards is not going to earn you points. You must shop with them. And if you’re looking to earn maximum points possible, your shopping patterns should be fairly consistent. Remember you need not shop out of your way or buy things you wouldn’t have bought otherwise.
The key is to push all your expenses to your card. In other words, use your credit cards during every shopping scenario possible and ensure you pay the entire balance every month.
Defaulting on payments is a strict ‘no’, as you would incur interest charges and that could hurt your accrued credit points. Determining the right card for particular retailers could be slightly challenging, particularly when certain cards could alter the different product or shopping categories’ values once every quarter.
Another way to make more rewards is via shopping at an online shopping portal. Shopping directly on the website of your favorite retailer or catalogue may not earn you points. But accessing your favorite online retailer’s site through a shopping portal or online mall would automatically earn you miles or points for each pound spent.
These rewards are tagged to the points that you would eventually make for having used the credit card.
Create Brand Loyalty and Make It Count
If you believe you shop at a particular brand more than an average buyer, you must consider capitalizing on your relationship with that brand. In other words, attain elite status with the brand. Attaining such a status won’t just open you up to various shopping upgrades and enhanced customer service, but the elite standing is also pivotal for earning additional points.
Once you’ve earned the status, you can challenge or match other hotels and airlines and reap in to the benefits across various programs.
Kindly note all brands may not offer “elite status” programs and the status levels could also vary across programs, with every hotel brand and airline probably resorting to a unique naming convention. For example, some brands may have three or four levels and then there could be other companies that may increase the level count.
Attaining an airline’s elite status level could mean perks such as priority boarding and zero-cost checked baggage allowance. A similar status with hotels could fetch you complimentary room and late checkout upgrades. Needless to mention, the benefits offered would increase with the status level attained.
Tracking and Redeeming Points
Accruing points is only half the job done. It could be extremely difficult to manually track all the miles and points accrued if you’re a frequent traveler or use the card for expenditure quite often. Therefore, use a reward point tracking software or tool to stay atop your account balances.
The remaining half of the equation is redeeming those points. If you have a goal in place (as aforementioned), making good use of those points becomes easier.