Learn how to enhance the value of your rewards credit card and avoid common pitfalls.
Credit card rewards can be a fantastic way to earn back money on purchases, enjoy free travel, or save for education. However, if you're not careful with how you utilize your cards and redeem your rewards, you might miss out on significant value.
“It's crucial to earn points that align with your goals and to use the card that maximizes those points,” advises a points expert from a leading travel community.
Are you missing out on your credit card rewards? Here’s how to correct these frequent mistakes:
Using Cards for All Purchases
If you can pay off your balance each month, consider using your credit card for all expenses to boost your reward earnings.
How to increase value: Make a deliberate effort to transition spending from cash or debit to your credit card, then ensure your balance is paid off in full monthly.
Letting Points Expire
While most credit cards keep rewards from expiring, some do not. A forgotten balance on an infrequently used card can lead to lost points.
How to increase value: Check your account's terms. Many card issuers will reset expiration just by making a purchase. If you're planning to stop using a card, find ways to utilize the points before they vanish.
Not Meeting Signup Bonus Spending Thresholds
Credit card companies often entice new customers with substantial signup bonuses. However, you need to spend a specific amount within the initial months to qualify for these bonuses.
How to increase value: Before applying for a card with a signup bonus, evaluate whether your spending habits can help you meet the required threshold. If you can, prioritize using that card until you reach the minimum.
Neglecting Rotating Rewards Categories
Some rewards cards provide higher cash back in seasonal categories.
For instance, the Chase Freedom card offers 5% back on department store purchases this winter, compared to just 1.5% on other transactions. Remember, you must activate these categories.
How to increase value: Create reminders to opt into the bonus categories as they become available throughout the year.
Overlooking Online Shopping Portals
Many credit cards allow you to earn extra rewards when shopping online through their portals. For example, Barclays Reward Boost recently offered bonus points for cardholders who accessed retailers like Bed Bath & Beyond through their portal.
How to increase value: Check if your card's shopping portal provides a browser extension for automatic alerts when you’re shopping at sites offering extra rewards.
Not Using a Business Rewards Card
Small business owners often use personal cards for business expenses, but business credit cards can offer better rewards.
Plus, having a dedicated business card simplifies tracking expenses.
How to increase value: Apply for a business credit card and use it primarily for business-related purchases.
“Many small-business owners don’t realize they can obtain a business credit card early on,” points out an expert from a small-business resource. “You don’t need to be incorporated or profitable, just have a solid personal credit score and income from other sources.”
Carrying a Balance on Your Rewards Card
Current average interest rates on new credit cards hover around 20%—far exceeding the value of any rewards earned.
How to increase value: If you have credit card debt, look into transferring it to a card with a promotional interest-free period. Focus on paying down the balance before the offer expires, and hold off on rewards spending until then.
