Master the Art of Saving with Rewards Credit Cards

Saving money should be one of your financial goals. Many people do not know this but you can use your rewards credit card to actually increase your savings. You need to maximize your hard earned points so that you can accumulate more rewards. Become a savvy card holder to positively influence your financial future. In order to achieve this, you need to perform the following:

Have the Most Appropriate Card

At the moment, there are probably thousands of credit cards available. Because of this, you can easily be lost in the sea of options laid out in front of you. The most important step that you need to take to save efficiently is to have the best card. Do not blame yourself if you find this quite difficult to accomplish. Credit card companies spend huge amounts of cash to advertise their products in hopes that they can effectively convince consumers to sign up for their card.

You will most likely find 1% cash back for every dollar you spend. Basically, that is just worth a cent as creditors change it to another name (i.e. miles, points, travel rewards, and so on). To have the best card, go for the one that gives you more than 1%. You might be surprised that there are cards that can let you earn up to 50% more than other regular rewards cards.

Don’t Fall for the “Special Offer” Trap

Some cards will let you earn up to 5% cash back for each purchase you make. There is a catch, however—you can enjoy this offer for a limited time only. Afterwards, the rate will drop to 1%. There may also be spending limits that will make it more difficult for you to receive the 5% cash back. Instead of going for a card that gives you a promo offer on rebates, why not opt for one that gives 1.5% cash back permanently?

Choose Cards with Cash Back Rewards

Points and miles are great if you are a huge spender or a frequent traveler. However, if you are an average person who uses his or her card for weekly purchases, go for a card that gives cash back. Most point systems have restrictions and requisites in redeeming the rewards. With cash back, the prize is pretty much straightforward.

Pay Your Balances in Full Each Month

You can only benefit from a rewards card if you do not carry a balance. Oftentimes, a rewards card comes with higher APR than those that do not have incentives programs. If you do not pay in full, the interest rate will instantly dominate the rewards that you can get.

Don’t Overspend Just to Gain Rewards

This is a universal blunder committed by card holders. The logic goes that if they spend more, they can earn more rewards. Chasing the cash returns or the points can eventually lead to financial trouble. Oftentimes, those who do this often encounter problems with paying their balance in full because their funds could not cover the charges they have made to the card.

Rewards credit cards, when used properly, can significantly help you save money. However, if you mismanage your account, this can lead to financial distress and, eventually, extreme debt.