By now, you've probably been borderline harassed by numerous credit card companies asking you to open a line of credit with them.
Usually the pitch is, spend a certain amount in the first few months and receive a bunch of promotional points or some credit to your account. I know these offers may seem too good to pass up at times, but these are not the shiny objects that should be attracting your interest; reason being that these are one-and-done rewards.
If you're shopping around for a new credit card, or just want to know how to get the most out of what you already have, read on for 5 of the best ways to maximize a credit card's value.
1. Lifestyle Leads the Way
If you’re looking for the perfect new piece of plastic, I recommend considering your routines and hobbies to start. There are tons of options out there that reward you for your everyday purchases.
Find yourself spending half the week perusing through the produce aisle at your local supermarket? You may be interested in a credit card that pays you for grocery shopping (and the gas you burn getting there for that matter). Lending Tree has some great no-fee cash back rewards card recommendations that will provide you with some nice returns on the purchases you make on the regular.
Or maybe you’ve caught the travel bug and it looks like it's found its forever home. Check out this list of inexpensive ($0-95 annual fee) travel rewards cards by Compare Credit that will turn your spending into miles or points for your next getaway.
One thing I'd like to point out here; many of these cards require good to excellent credit in order to get approved. If your credit score could use a bit of a helping hand, check out our blog on The Do's and Don'ts to Boosting Your Credit Score.
2. Take Advantage of Card-linked Offers
The best credit cards out there don’t just offer rewards on a couple of routine purchases. Card-linked offers allow you to save even more on your favorite brands simply by using your card to make a purchase.
However, these offers usually don’t last forever. Many are seasonal or available only for a few months before expiring. Make sure to check regularly what offers your credit card has before heading out on your next shopping spree.
3. Use Your Credit Card to Pay for Everything (when possible)
If you aren’t paying your credit card balances in full each month (which you should be), this will likely backfire on you due to the insanely high interest rates companies charge these days. But for those who do, this is an easy way to rack up thousands of extra points every year.
If I don’t have to use cash or debit to pay for things, I won’t. Chances are I'd get nothing in return for it anyway. No points. No cash back.
Some not-so-obvious expenses to consider paying with your credit card are bills. You know you have to pay these every month (I hope...) and using your credit card gives you an opportunity to make a little something back on them. Keep in mind, however, some companies may charge you a fee for using a credit card (or debit card), and if there is one, it probably won't make sense to go this route.
4. Ask About Raising Your Credit Card Limit
We all want the opportunity to make larger purchases, and applying for a new credit card can be an easy way to make that happen. But going this route too many times can take a toll on your credit score.
Another way you may go about increasing your overall credit limit is simply…asking for it.
If you’ve been making consistent on-time payments and keeping your spending within a reasonable range, you are in a great position to pop the question. If you’ve gotten a raise recently, that will certainly help your case as well.
Raising the limit of your card can also help to reduce your utilization, resulting in an increase in your credit score.
Watch out though; asking for an increase to your limit may result in a hard inquiry on your credit report which could cost you a few points. If you can’t afford to take a hit, see if a hard inquiry can be avoided.
In some cases, you may find that your credit card company has automatically raised your credit limit. This is likely due to the factors I mentioned a few paragraphs above (and best of all, doesn’t require a hard inquiry). Be sure to keep your financial information up-to-date so that companies know to consider you for a credit increase.
5. Getting the Most Out of Your Credit Card Points
Now that you’ve stacked up all these points, how should you use them?
Sure, you can redeem them for statement credits or gift cards, but most likely that doesn’t provide the best value to you.
For example, if you have American Express Membership Rewards, one way to squeeze the most out of your points is by transferring them to partnering hotels and airlines. This is hands down the most useful way to use your American Express Membership Rewards.
Sometimes they even offer transfer bonuses. As of May 2, 2020, you can transfer 1000 American Express Membership Rewards points for 1600 AeroMexico Club Premier Points.
There are a few other credit card companies that allow point transfers to partners. Check in with The Points Guy every now and then to see an up-to-date list of who is offering similar bonuses and when they expire.
Taking Action on Maximizing Your Credit Card's Value:
Check out the links under Lifestyle Leads the Way above to see if any of the cards listed are in line with your routines and hobbies. You should also research a few other options just to make sure you didn’t miss anything.
Now that you’ve received your new card (or have one already), go through some of the offers that are available each month. I’m sure there is something you can save on from the jump.
Use your credit card for everything possible. Those points will add up.
After you’ve gotten a few (at least 6) timely payments under your belt, see if raising your credit limit is something your credit card company is willing to do. And be sure to ask if a hard inquiry is necessary.
Once you’ve racked up some points, check out all the ways you can redeem them each month. It's likely statement credits and gift cards aren’t your best options.
Comments