Rewards Points-Are You a Redeemer or a Saver?

Rewards credit cards can help you earn rewards for your everyday purchases. But how exactly do these cards work? And how do you know what type of rewards to get and when to redeem them?

How do rewards credit cards work?

A rewards credit card offers you one or more incentives when you use it. The more you use a rewards credit card, the more rewards you rack up.

Rewards generally fall into one of three categories: points, miles and cash. Point rewards are offered based on the dollars you spend. Some cards give you one point per one dollar spent. Others give more points based on how or where you use your card. Typically, you can redeem your points for gift cards, merchandise, cash or travel rebates. Miles points, however, can be redeemed for airline tickets. And, cash is … cash. Most credit card companies will mail you a check, deposit the money into your bank account or let you apply it to your credit card balance. Some rewards cards offer multiple incentives and let you choose from their offerings, while others may only offer one incentive.

Be sure to read the fine print with any rewards program. Some have restrictions, caps and even expirations on their rewards. This is where you’ll also find information on your interest rate and annual fees.

How do I maximize my credit card rewards?

If you have a rewards credit card, you should get the most out of it. Here are some tips to get the card that works best for you:

• Check your credit score before applying. Those with the best scores will be offered the best rewards.
• Get a rewards card that matches your lifestyle and spending habits. If you’re into traveling, get an airline miles rewards card. If you’re all about budgeting, go with a cash-back rewards program so you get paid for your everyday expenses. Compare the offerings of the rewards cards you’re considering—this will help you choose more wisely.
• Charge your daily expenses. If you’re getting points or cash back for every purchase, use your card to pay for gas, groceries, morning coffee runs, etc. Then, use the money you’ve already saved to cover these expenses to pay your credit card bill. Try making several payments each month—this gives you a better idea of how much you have in your account.
• Use it for recurring bills. Since you already have to pay your monthly bills (i.e. utilities, cell phone, Netflix, etc.), why not get rewarded for doing so? Again, you’ve already budgeted for these expenses. Use your rewards card and then pay it off quickly.
• Don’t make late payments. Pay your credit card bill in full every month. If you don’t, your rewards may go toward paying off high interest fees rather than getting free stuff.
• Redeem your rewards at the right time. There’s a right time for everything, right? So, when should you keep saving and when should you redeem rewards? When it comes to cash back, it’s often advised to redeem the cash back each month or redeem it once you reach the minimum redemption amount, unless you have something specific, you’re saving for—like a vacation or new furniture. As for travel rewards, redeem those when it gives you the maximum value, like paying for your most expensive trip of the year. With all rewards, never wait too long to redeem them as they can lose value or expire.

Is it better to get cash back or points?

Each has its advantages. For example, cash back is tax-free, and you’ll earn more cash than you would if your money was sitting in a bank account since the annual percentage yield is small compared to the 1-2% cash back commonly offered by rewards programs. Many people like rewards points because you can choose what to put your points toward—like gift cards, travel rebates and even cash back. Ultimately, your spending habits and lifestyle will determine if cash back, points or another type of reward is best for you.

Here at Mountain America, we offer two rewards credit cards. With our Visa Rewards credit cards, you earn points on every purchase and then can easily redeem them for gift cards, event tickets and more. Like its name suggests, with our Visa Cash Back credit card, you earn 1.5% cash back on each purchase. We even offer a MyStyle Rewards Checking account. Check out all the benefits and apply for the one that works best for you so you can start redeeming, saving and spending the rewards you deserve.
 

Source links:
¹CreditCardsExplained.com Google survey 2018
²Bankrate.com 2017
³CreditCards.com 2018
⁴Cardratings.com 2018
⁵Loyalty360.com