Everyone wants to get the most bang for his buck. So why is it that some people insist on carrying four or five credit cards: the Visa to pay for clothes; the MasterCard to pay for gas; the American Express to pay for travel? Each card has a different rewards program and since you, as the customer, are splitting up your bills across your many credit cards, it takes forever and a day to benefit from the credit card's rewards programs. If you really want to get the most bang for your buck, you should consider making all of your purchases on one credit card...the card with the best rewards program.

How Rewards Programs Work

These plans are very simple. Rewards programs allow the credit card customer to earn points, cash or other incentives just for simply using their credit card. These incentives can be used for anything from airline tickets, to hotel stays to...well...almost anything. Is it any wonder rewards credit card programs are becoming increasingly more popular year after year? In fact, rewards cards made up about one third of the cards analyzed in the Credit Card Survey 2004 by San Francisco's Consumer Action.

The credit card companies have partnered with hundreds of airlines, hotel chains and retailers worldwide. You can redeem your rewards points for the services and goods that these vendors provide. These rewards programs also offer points for goods and services not available to the general public. This means you are getting access to deals exclusive to credit card rewards programs.

How do you Earn and Spend Those Rewards Points

How you earn points and how you spend those points are two completely different things though. Even though these cash-back and rewards program credit cards are very similar, you need to be careful.

Cash-back programs are not necessarily as clear as they would seem. You don't actually get "cash-back" from the credit card company. They are not going to send you a check. Cash-back is actually applied to your existing balance in order to lower that balance. Or another way credit card companies give you cash back is to give you a certain number of points based on your purchases. You can then redeem those points with the many airlines, hotels or other retailers signed up the credit card rewards program.

Choosing the Best Credit Card Reward Program for you

The best way to choose what rewards program is best for you is to know your own spending habits. If you carry a balance every month, a rewards program that has a high APR may not be your best bet. Any cash-back awards would be eaten up. If your rewards program has a high interest rate, you need to be able to pay off your credit card each month to get the most from the program.

So that means that if you carry a balance each month, like most of us do, you should find a rewards program with a low interest rate. But if use your credit card as merely another payment tool like your checkbook, and pay your bill off each month, then a credit card rewards program with a high interest rate is not your biggest worry. Credit cards rewards programs with high interest rates often have the best benefits for the consumer as well...as long as you don't carry a balance.

Next you need to know what form of "currency" you prefer. Many rewards programs offer points for every dollar spent. The company then in turn offers gift certificates to a particular shopping portal so that you may redeem those points.

Getting the Most of the Rewards Credit Cards

The key to this plan is simple...know thyself. Find credit card deals with the rewards program that will give you the most rewards points and offer the deals you want based on your own individualized spending patterns. The more credit cards you spread your purchases across, the more likely your rewards will be limited. It's better to keep all of your purchases on one card in order to get the most benefit from the rewards programs. Using just one credit card will allow you to accumulate those reward points quicker and give you almost unlimited spending options.

Use your credit card for any purchase you would normally pay for by cash, check or debit card. Just remember to pay off your bill each month to avoid any unnecessary interest charges.

To earn the most rewards, you need to spend a lot on your card. Use the card to pay your electric bill. Use the card to pay for gas for your car. Use the card when you go to the movies. Using your credit card this way will quickly build up the number of points you've earned and will allow you to benefit from the rewards more often.

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Comments

stan winston, 06:29 AM, October 31, 2007
Rewards are great. I stronly recommend everyone to improve your credit scores (although it's quite easy to say) and get any reward program. I now own a Miles by Discover® Card and I must say it's just great. Never loose this opportunity!

Dana Pierce, 12:13 AM, May 05, 2008
I have an airmiles credit card and I strongly recommend it!

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