How to Determine Whether the Points Are Worth It
Before you can decide whether pursuing points and miles is worthwhile, you must first understand your individual goals and spending habits, according to Matt Schulz, chief credit analyst at LendingTree.
Do you prefer cash back or points and miles, for example? Do you prefer flying or travelling by car? Do you have a favourite hotel chain or airline? Finally, do you have any specific incentives earnings goals?
All of these questions, according to Schulz, might help you evaluate whether pursuing points and miles is worthwhile. After all, there’s no point in earning airline miles if you’re afraid of flying, so why bother?
Meanwhile, keep in mind that all points and miles are not created equal–and frequently aren’t even close.
“It’s easy to get fooled by that enormous 100,000-point welcome bonus,” Schulz adds, “but the truth is that you need to research exactly what those points will earn you before you apply.”
The analyst cites the fact that hotel points are rarely as valuable as airline miles, and that the value of all points varies depending on how they are redeemed.
“The more you know about the worth of those points, the better off you’ll be,” he advises, “so do your study on the rewards program’s website before diving in.”
Meanwhile, you must be aware of the costs associated with earning points and miles. Due to the fact that you didn’t have to pay for it, a card with no annual fee may leave you somewhat ahead. Annual fees, on the other hand, are frequently well worth the money if the card offers important features or if you earn far more in rewards than the price.
“Also, make sure you understand how much you need to spend on your new credit card to qualify for the sign-up bonus,” Schulz advises. “Those incentives might be fantastic, but going overboard to acquire them is a prescription for disaster.”
Most crucially, due to the high APRs charged by rewards credit cards, carrying a debt on them nearly never makes sense. If you’re prone to carrying a balance on your credit cards, you should probably avoid them completely.
5 Ways to Increase Your Reward Potential Without Going Overboard
Do you believe you will never be in debt? Please reconsider. According to recent credit card debt figures, Americans owe $804 billion on their cards, with the national average outstanding balance being $6,569.
Make Everyday Purchases Using Your Card
According to Schulz, most people think of credit cards for big purchases, but using them for routine transactions can help you earn more rewards. Make sure you’re using your credit card for things like petrol, groceries, streaming services, and other little expenditures throughout the month.
Plastic Bill Payment
Meanwhile, keep an eye out for other payments you can pay using a credit card, even ones you might not expect. You might be able to pay for your health insurance or your gas or electric payment using a credit card. The more plastic bills you can pay, the more points or miles you’ll accumulate over time. Just be certain you
Choose the Best Reward Credit Card
Make sure the card you choose is compatible with your spending patterns.
“If you spend a lot of money on groceries, look for a card that gives you extra cash back or points for that,” adds Schulz. “Gas, food, travel, and even streaming are all the same.”
Consider a card that offers a high flat rate of rewards across numerous categories if you don’t want to worry about bonus categories.
Budget Management
Schulz also emphasises the need of using a credit card in conjunction with a monthly budget. After all, he claims, a monthly budget might help you keep track of how much you spend each month and on what.
This information can not only assist you in determining which rewards credit card is appropriate for your objectives, but it can also assist you in determining how much you should spend on your card each month.
“This is especially important if you’re chasing credit card rewards because sign-up bonuses often require a minimum purchase,” Schulz explains. “You generally shouldn’t acquire the card if you can’t easily afford to spend the minimum required amount.”
Group Meals Costs (But Make Sure You Get Reimbursed)
Another method is to make purchases for others and then ensure that you are reimbursed. People may easily send money to other other via services like Apple Cash or Venmo, making this considerably easier.
Schulz uses the example of paying for a meal with a group of friends or relatives and being compensated by those who were present chevalier. However, he warns that there is a risk because you won’t be “ahead” with benefits unless you are paid back.