Personal Finance Tips

Almost everyone has a credit card with a rewards program, but are you getting the most credit card rewards that are available? Are you truly maximizing the rewards your card has to offer? I’m going to give you a few tips on how you can increase the rewards you receive from your credit cards reward program.

First let’s get one thing straight. If you carry a balance on your card you are defeating the purpose. You will pay far more in interest than you will ever get out of the rewards program. Let me illustrate. Say you have a balance of $8,000. I just picked out a number. Most credit card companies charge from 12 to 18 percent interest. We’ll just use 15% for the sake of argument. In a month you would pay $100 in interest. Over the year you would pay about $1,200. In order to earn $100 in rewards points you usually have to spend about $10,000 because the average program pays about 1% in rewards. So remember first only use a card that you can pay off the balance each month. This is critical.

Once you have your credit card ready you need to organize. Yeah, I know, it sounds like a little overboard for a small reward each year, but if you do it right it could end up being a large reward or bonus to you for Christmas. What you need to do is jot down all of the things you spend money on each month, including the bills. This is one area that takes a little more work but can really increase the rewards you receive.

After you have a list, look at all of the things you normally pay cash for or use your debit card. These could be things like buying groceries, paying for gas, paying for school lunch for the kids and many others. These are the first things you need to change. It adds up to hundreds of dollars a month and equals lots of points. By the end of the year this could be thousands of extra points.

Next go down your list again. Look at al of your monthly bills. There is the phone, cable, water, gas, electricity, auto insurance, health insurance, cell phone. Remember, these should not be loans you are paying down, just monthly bills. Most of the ones I listed here can be set up to be charged to your credit card with rewards each month. This adds up fast, especially during the summer when the air conditioner is running a lot.

A third tip is to use your credit card for large purchases, even if you have the cash saved. For example if you are buying new furniture. This could cost thousands of dollars. If you already have the money, why not put it on your card and then immediately pay off the balance. This is key. Don’t let the card cycle and accrue interest, it will cost you more than the reward you get. Remember be creative and always offer to use your card first. Sometimes you can even put the down payment for your new car or pool on your rewards card.

I just want to share one more tip. When you have accumulated a boatload of rewards do not spend them on that super cool item, like a bike or golf clubs. Odds are you could get a gift card for the retail store that sells them. For example, I was looking through the rewards offered on one of my rewards cards and they had a Wii. It was something like 50,000 points. Well with 50,000 points I could get $500 in gift cards to Best Buy. I could buy the Wii and a bunch of games to go with it. Remember, almost all of the time the gift cards will get the best bang for your buck.

It takes a little discipline but if you follow these simple tips and always look for new ways to use your rewards credit card you will find that accumulating thousands of points does not really take that long. In fact, you could get hundreds of dollars in rewards each year.