Credit cards are not just a convenient way to pay for your purchases, but also a smart way to earn rewards and save money. Rewards credit cards offer various benefits such as cashback, reward points, vouchers, discounts, and more, depending on the card type and the spending category.
However, not all cardholders can make the most of the rewards on their credit cards, either because they are unaware of the best practices or because they do not use them optimally. Here are five ways to maximise the rewards on your credit card and get the best value for your money.
Understanding Credit Card Rewards
Before we discuss the tips, let’s first understand how credit card rewards work. Credit card rewards are essentially a rebate program that gives you back a percentage of your purchases in the form of points, miles, or cashback. The rewards earned can then be redeemed for things like flights, hotels, gift cards, or statement credits. There are three main types of credit card rewards:
- Cashback Rewards
Cashback rewards give you a percentage of your purchases back in the form of a statement credit or direct deposit into your bank account. Cashback rewards are usually straightforward, with no restrictions on how you can use the rewards.
- Points Rewards
Points rewards are similar to cashback rewards but are typically offered by travel credit cards. Instead of getting a percentage of your purchases back, you earn points that can be redeemed for flights, hotels, car rentals, or other travel-related expenses. Points rewards can be more valuable than cashback if you travel frequently, but they may also come with more restrictions and fees.
- Miles Rewards
Miles rewards are similar to points rewards but are specifically designed for frequent flyer programs. Miles can be redeemed for flights, upgrades, and other perks associated with airline loyalty programs.
Optimising Your Credit Card Rewards: 5 Strategies for Maximum Benefits
- Choose the Right Card for Your Spending Habits
The first step to maximise the rewards on your card is to choose the right card for your needs and preferences. There are different types of rewards credit cards, such as travel, shopping, dining, entertainment, fuel, etc., each offering different benefits and rewards. You should compare the features, benefits, fees, and charges of various cards and select the one that suits your spending habits and lifestyle.
For example, if you travel frequently, you may want to opt for a travel card that offers benefits such as airport lounge access, travel insurance, discounts on flight and hotel bookings, etc. Similarly, if you shop a lot, you may want to choose a shopping card that offers rewards points or cashback on your purchases.
One of the best ways to compare and choose the right card for your needs is to use online platforms that allow you to compare and apply for credit cards easily.
- Know the Terms and Conditions for Your Card
The second step to maximise the rewards on your card is to know the terms and conditions of your card, such as the reward points earning rate, the reward points expiry date, the reward points redemption options, the minimum spend requirement, the annual fee, the interest rate, the late payment fee, etc. You should read the card agreement carefully and understand the fine print before using your card. This will help you avoid any unpleasant surprises or penalties later.
For example, some cards may offer a high reward points earning rate, but may also have a high annual fee or a short reward points validity period. Some cards may offer a low interest rate, but may also have a high minimum spend requirement or a low reward points redemption value. Some cards may offer a sign-up bonus, but may also have a high spending threshold to qualify for it. You should weigh the pros and cons of each card and use it accordingly.
- Use Your Card For All Purchases
The third step to maximise the rewards on your card is to use your card for all your purchases, as much as possible. The more you use your card, the more rewards you will earn. However, you should also be careful not to overspend or exceed your credit limit, as this may result in interest charges or fees. You should also pay your card bill in full and on time every month, to avoid interest charges and late payment fees, and to maintain a good credit score.
You should also use your card for the categories that offer the highest rewards, such as shopping, dining, travel, etc. For example, if you have an ICICI Bank credit card, you can earn up to 10X reward points on your online and offline shopping transactions, up to 15% savings on your dining bills at over 2,500 restaurants across India, up to 50% cashback on your movie tickets, and more. You can also enjoy benefits such as fuel surcharge waiver, instant loan, Gold’s Gym membership, etc.
- Take Advantage of the Additional Benefits on Your Card
The fourth way to maximise the rewards on your card is to take advantage of the additional benefits of your card. Rewards credit cards often come with other features and benefits that can add value to your card usage and save you money. For example, some cards may offer cashback on specific categories such as fuel, groceries, or utility bill payments, providing savings on everyday expenses. Some cards may offer universal acceptance, allowing you to make purchases at a number of merchant locations.
Some cards may offer credit score improvement, helping you improve your credit score by paying your bills on time. You should be aware of these benefits and use them whenever possible.
- Review Your Card Performance Regularly
The fifth and final step to maximise the rewards on your card is to review your card performance regularly. Monitor your card usage, rewards earnings, rewards redemption, fees, and charges, and evaluate whether your card is meeting your expectations and needs. You should also check your credit score and credit report regularly, and ensure that your card usage is not affecting your credit health negatively. Look out for new offers and features that your card issuer may introduce from time to time, and take advantage of them.
If you find that your card is not giving you the desired rewards or benefits, or that there is a better card available in the market, you may consider switching to a different card or upgrading your existing card. However, do also consider the impact of closing or opening a new card account on your credit score and credit history, and make an informed decision.
Maximising rewards on your credit card requires careful planning and strategy. By following these tips, you can make the most out of your credit card rewards program. Also don’t forget to check out credit card available which offer a range of features and benefits, including welcome benefits, rewards programs, travel benefits and so much more. So what are you waiting for? Avail yourself the lucrative rewards on your credit card today.