I have read many books over the years about simplifying your life and the majority of them warn about the evils of Credit Cards. “Chop them up!” they tell you. “Throw them out and never get another one!” they warn you.
I happen to disagree. I personally use credit cards for everything – clothes, utilities, gasoline, repairs – even groceries. The reason: cash-back rewards.
Every couple of months, I receive a check for $50 in my mail box just for using my credit card. I take that check and put it in my “Vacation Fund” so that by the end of the year, I have received a nice chunk of money from my credit card company.
There are some things to keep in mind about credit card rewards however:
Never Carry a Balance
Carrying a balance and paying interest fees defeats the whole purpose of the reward program. It is hardly beneficial to receive $100 worth of reward checks when you are paying $500 a year in interest charges. To get the most out of your credit card’s reward program, pay the balance off monthly.
Pay your credit card bill on time
Again, paying late charges cuts into your reward profits.
Pay your utilities, gasoline, etc. with your credit card
Certain credit cards will give you extra rewards when paying your utilities or buying gasoline with your credit card. Review your reward agreement to see if your card gives extra rewards for such purchases.
Shop around
Look at several different credit cards companies to find the ones that offer the best rewards. Some offer double or triple rewards points for certain purchases.
Make sure your rewards are of value to you
I have seen cards that do not pay cash rewards but instead allow you to receive merchandise, gift certificates or airline flyer miles. I am not much of a shopper (more of a “declutterer” actually) so I have no need for gift certificates for junk I don’t need – personally I prefer the cash. Make sure that your credit card pays you rewards that you find attractive.
Don’t forget to Cash In
Many reward programs will not automatically send you a reward check – or even tell you that you have attained enough points for a reward. Often, it is up to you to keep track of your reward points and take the initiative to cash them in. I usually log into my account every couple of months to take a gander at my points and to see how close I am to my next check.
Read your credit card notices
At times, your credit card company may change the terms of your rewards agreement – perhaps no longer offering cash rewards, only gift certificates. It behooves you to read those “Change in Terms” notices that come with your credit card bill.
Make sure your rewards carry over
Some credit card companies don’t allow you to carry your rewards points indefinitely – they may expire after a certain period of time. If this is the case, may sure that you are able to redeem your points within the specified time period.
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