A good way to save money on purchases is to do these with reward credit cards. If you use them sensibly, you’ll be able to maximize the rewards instead of hurting your credit score!
Having reward credit cards can be a double-edged sword. While they can give you interesting benefits on your purchases, they’re still credit cards and can hurt your credit score if they’re not used wisely. Here are 3 ways in which rewards cards can cost you money. However, you can learn to use them in a way where you maximize your rewards and avoid risks.
The key to getting the most rewards out of these cards is to strategically choose them. If you look at your spending habits, you’ll see that there are some products or services where you spend your money consistently, like groceries or gas. Focus your search on these!
When it comes to food, you’ll have to think about whether you’ll profit more from a rewards card from a grocery store, from a restaurant, or both. Whichever you choose, it should be the place where you buy more often. You shouldn’t get a rewards card from every shop you go to, but rather try to stick with one and get all possible rewards.
Think about it: if you make more purchases in one place, you’ll get more cash back or points and you’ll be able to exchange them for rewards sooner. In other words, what you buy will go everything to one place, which will allow you to earn more benefits in less time.
If you’re planning to get a rewards credit card for its specific benefits in one particular area, let’s say in gas stations or office supplies, check whether it’ll be worth it. Unless you’re a particular heavy spender on these items because it’s part of your job, for example, you may not achieve the most profit by getting a rewards card to pay for them.
Always read the fine print as well! When a card offers rewards on “travel”, there are many items that will fall into this category- and many that won’t. Before applying, check that your purchases will get you benefits and you’re not fooled. This will also help you see whether they’re annual fees or other things that will cost you money. Check that you’ll be able to offset these charges with the card’s rewards!
Read this article to see if you have to pay taxes on your credit card rewards or not!