Credit cards might not appeal to everyone, considering they can increase spending. However, a prudent person will use this plastic money best. Have you ever used a credit card in such a way that you knew you were better off paying using a card than cash? Well, most credit card users haven’t because they are unaware of how to optimize its use. But who said you can not? So here we are to help you make the best use of your credit cards so you don’t feel bad about the hefty monthly bills. Credit cards give you reward points for the expenditures you make. Knowing what reward points are can be a game-changer to your credit card use journey.
What do you get for your reward points?
- Cashback – You can exchange your points for cashback. Your credit card will be credited with the amount you received, and you may use it to settle any outstanding debts or pay your dues.
- Vouchers – You can exchange your points for various vouchers on online purchases. You can also redeem them by purchasing from the bank’s partners. You can mainly use them to get a discount on flights, hotel bookings, shopping, etc.
- Catalogue – You can pick from various items from several day-to-day use products, electronic items, etc., and get a discount. You can also redeem your points for various services and products.
How to Optimise Your Credit Card Reward Points?
- Strategically Time your purchases: Banks often give many offers during the festive season and other times when the bank’s partners announce sales. Sometimes, deferring your not-so-immediate purchases till the bank announces a good also helps.
- Take care of the caveats: Banks may announce tremendous rewards but with the condition that you must reach a specific spending limit. You might have no offer if you fail to reach that limit. Keep checking on how much more you need to be eligible for the rewards and discounts. Some cards provide a simple reward structure, while others have a complex reward point structure. Some cards offer highly-priced products only; always keep an eye on what you are buying to ensure you don’t always buy what you don’t need. Some products you might not need today, but with the rewards, you might buy them. The thumb rule is to avoid buying for future needs at all.
- Stay updated: Card providers can change the terms of rewards and cashback as and when they like, the validity of reward points, offers, and schemes (loyalty programs). Beware of these changes and look for the occasional big deals.
- Sign-up bonuses: Whenever you sign up for a new card, it has substantial welcome bonuses. You can also plan to buy your card for your heavy purchases to get discounts.
- Don’t spend money just to earn rewards, but whenever you do, use your credit card: Increasing expenditure with a credit card will put you in a loop of poor finances. Never exceeding expenses over 30 percent of your credit limit can help keep your expenditures in check.
- Pay with your rewards points instead: With just a swipe of your card, you may instantly redeem your reward points over the counter at specific partner merchant locations. Additionally, you can use your points to pay for transactions made with a few particular online merchant partners. Your reward points will be adjusted for the purchase price following the transaction.
What are the types of credit cards?
I. Co-branded credit cards- Co-branded credit cards are issued in partnership with specific brands. You will only have to buy products from that brand to get rewards. They give higher reward points or cashback for purchases made at the partnering brand’s outlets or website.
II. Category-specific Cards- Certain credit cards focus on specific spending categories and offer higher rewards for those categories.
III. Premium or Lifestyle Cards- Premium credit cards offer enhanced rewards and benefits. come with higher annual fees but also
IV. Online Shopping Cards: These cards offer higher rewards or cashback for purchases made through e-commerce platforms or specific online merchants.
V. Travel Rewards Cards: Travel-focused credit cards often offer higher rewards for flight bookings, hotel stays, or travel-related expenses.
Just make sure you stay moderate in your expenses to take benefits of your card. As long as you keep that in mind, credit cards can never be a burden for you.