How many credit cards do you have in your wallet? Do you have more than you don’t carry? Are you using them for the credit card rewards?
One of my favorite ways to reduce the costs of our travel is to use the free stays or cash rewards I build by using my rewards.
Just so you know, one of my top missions in life is finding my kids and I cheap adventures to get away from home because we all know that us single gals need to stretch every penny in our single income homes!
However, just using the cards and getting the rewards is not necessarily winning at the game of rewards.
Unfortunately, I talk to many women and families that are still duped by the credit card companies and are losing much of their hard-earned cash by thinking they are gaining rewards.
I have been able to pay for hotels for weeklong vacations for my kids and I several times using the rewards from both cards.
Another rewards card I really like, that earns cash back rewards is available to USAA members. It is their Cashback Rewards Plus Card. It awards 5% cashback to gas and all purchases on military bases. For many service members this could be 5% on all their gas and groceries at the Commissary which is many military families’ main spending! I love that.
So, what are the ways to win at the game of credit card rewards? Let me lay it out for you with 5 simple tips.
Choose a credit card with rewards that suit your lifestyle
There is one fact when it comes to credit cards, not all credit cards are created equal!
When you are shopping for a new card, think about a few things to see if they are the best fit for your lifestyle.
Take some time to review your spending habits. Are you buying mostly gas and groceries? Are you spending more on entertainment and travel? Do you spend a lot for your business?
Guess what…There is a card for that! Choose a card with rewards that will pay out the most to YOU because the rewards reflect your spending.
For the gas and groceries, choose the highest rewards for these two categories.
For entertainment and travel, you might like a travel points rewards system that adds multipliers to your dollars spent when they are spent on restaurants, travel, and other entertainment.
If you are an entrepreneur and spending on office supplies and services, there are many business cards that pay out higher rewards for these categories. (also, bonus, some of these business cards won’t show up on your individual credit report which is excellent for you solopreneurs!)
If you are a cash lover and just want the most cash you can get back for your spending, be sure to look for a top cash back card. If you love travel points, look for cards that will give you the most bang for your spending bucks.
Be careful of credit card reward systems that charge an annual fee
Always watch for those pesky annual fees! Some financial folks will advise to avoid them altogether, but I am a dollars gal. I always compare my cost vs. benefit in every financial situation.
With annual fees, many will simply eat away at the rewards you earn to make what you gain slim to nothing for the year.
Some are worth it because you earn far more rewards than you pay out each year in fees.
For example, both the cards I mentioned loving have annual fees! I think they are worth it.
My Marriott Rewards Business card has an $85 annual fee. Each year I get a guaranteed one-night stay at a certain tier hotel. I have consistently used these free nights for $129 – over $200 a night stay. This means I make back my fee instantly because it buys me a reduced stay in a nice hotel. Then beyond that, all the Marriott points I earn for free stays are the earned rewards.
The Chase Sapphire Card has a $95 annual fee. This one is higher and when my spending is low, I don’t make as much each year. However, I also factor in the other benefits I have received. I signed up with a sign-up bonus worth over $600 in travel rewards. I have also used the card’s travel insurance to cover a rental car I rented for our trip to Hawaii. While there, our rental Jeep was stolen and never recovered! I was able to cover the replacement cost of the vehicle with this coverage and didn’t need to use my personal car insurance saving me $1000 deductible and any increase in my own insurance costs due to the claim.
I have had the card a little over 3 years and I earned enough rewards with just those two instances to cover the annual fee for 16 years! Each year, I have still been able to earn enough to pay for rental cars or hotel stays that reduce my overall cost for our vacations.
Before signing up for an annual fee card, evaluate the benefits against your spending habits to decide if the card will in fact be profitable for you.
If it seems like it will, you can always sign up and then close the card if it comes to a point that you are not gaining enough to cover above the annual fee.
Never let your credit card balance be carried over to the next month
First, let me make sure you know what it means in the financial world to have a balance ‘carried over’.
Simply put, that means you didn’t pay your bill in full when you received your credit card statement. You know, the one that says, Minimum Payment due is $20 or Current Balance is $659.
You can choose to pay either of those numbers or any number you can come up with that is over $20.
If in the case of our example, you pay less than $659 you are allowing a balance to roll over to the next month’s bill. This is when the credit card companies will charge interest on the balance, as it rolls over.
If you charge more than you pay during the month, you are costing yourself the interest on top of the purchases. Most rewards cards carry interest of over 20% these days. Rewards are generally equal to 1-2% of dollars spent, some will be higher like the 5% cash back example at the beginning of the post, but none, I repeat, none give out rewards of over 20%.
Who wins here? Definitely the banks and they don’t need any more of your hard earned money to pad their pockets. Am I right?
Bottom line, only pay for something with the credit card, if you already have the cash to pay it off. You can pay it off as soon as you charge it if you want it to seem more like a debit card.
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Put your cards away if they do have a balance
Now that we discussed the problem with carrying a balance. It’s time to put your cards away and stop using them if you have a balance.
I say put the cards away, but with today’s technology you will have to take a few more steps to stop using them. In the “good ol’ days” 😉, all people would have to do would be cut their card up or some would even freeze it.
Have you heard that technique? You put your credit card in a bowl of water and the water in the freezer, because if you wanted to use it, you would have to wait for it to thaw out which you give you time to think the purchase over. It also wouldn’t be in your wallet if it were in a big chunk of ice.
Well, now a days, the credit card companies have made it so easy to keep using your card. You don’t have to have the card physically to swipe it anymore.
If you genuinely want to stop using the card so you can focus on paying it off, you will need to do a few things.
First, leave it at home or cut it up. This will stop the swipe spending when you are out physically shopping.
Second, remove it from the accounts at your online retailers of choice.
Third, remove it from Apple Wallet and other electronic pay systems on your phone.
Fourth, remove it from the memory auto fills on your computer and phone in your browsers.
Fifth, deeply commit to not using your card until it is entirely paid off.
Watch for special offers of extra credit card rewards and plan to maximize them
If your card offers special incentives or extra rewards, set up a system to find out about them. Follow your credit card company’s social media or subscribe to their email list to hear when they have special offers.
For example, my Marriott card will consistently offer extra points for stays during certain time frames. I keep track of this because if I do any travel during these bonus times, I try to stay in a Marriott to maximize the amount of points I can gain.
Some cards have revolving or changing rewards systems. Such as all gas is 5% cash back for a quarter, then it changes to all groceries, then restaurants.
Know which items carry the highest reward values on which cards and purchase with those cards to gain the most rewards from each use.
All in all, winning at the game of credit card rewards isn’t too hard
With a little self-discipline and determination, you can win over the banks and actually make some money or monetary gains in the form of free trips or other prizes instead of paying the bank tons of interest!