Benefits of credit card rewards

In addition to building credit, credit card companies offer additional incentives for consumers to pay with plastic. Credit card rewards programs allow customers to earn more when they spend more, but always remember to use your card wisely.

How do they work?

Credit card rewards all serve the same purpose – they reward customers for using their card more. Customers earn a set number or percentage of rewards for every dollar charged to the card. Different programs reward you for different types of purchases. For example, spending in certain areas such as gas stations, grocery stories or major retailers can reap larger rewards. Reward delivery methods vary among programs, with the most common being cash back and travel rewards.

Choose the right program

The card that’s best for you may not be the same card as someone else’s. It’s important to align your rewards programs with your spending habits and financial goals. If you’re a frequent flyer, then airline mile or travel rewards are a good option for you. Frequent shoppers may opt for gift card redemptions at major retailers. If you’re on a tight budget, you might consider a program that offers cash back that can be applied to your statement. Paying your monthly balance off in full each month will keep you out of debt, improve your credit history and give you access to great rewards at the same time.

Be careful – some programs may be enticing you to spend more money than you should be. A good rule of thumb is to research and sign up for a program that fits your lifestyle.

Don’t lose out on free cash

Surprisingly, a shocking number of Americans have never redeemed credit card rewards. If you’re thinking about stocking up on your rewards for future redemption – think again. Unfortunately, many credit card rewards programs come with an expiration date. Always read the fine print of your credit card agreement. You may be better off redeeming your rewards once you’ve earned them, or you can risk losing them for good.

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