Fact: According to a 2011 study, about one-third or more of the reward points obtained from the credit cards are unused every year.
So, how do you maximise credit card reward points? There is no harm in getting something for nothing. Understand that every purchase made with a credit card carries a reward value. To ensure that you make the best of the reward plan, here are a few tips to make a note of:
1. Choose a credit card that suits your lifestyle
The first and foremost step is to select a credit card for your day-to-day purchases. Though there are a plethora of options, look for a card that not only suits your lifestyle needs, but also pays off 1.5% (minimum) on every purchase.
Since competition has spiked up these days, most credit card companies tend to offer higher sign-up bonuses. Hence, it is important to do a quick research on all the perks that a card offers.
2. Sign up at the right time
Once you have chosen the card based on your needs, learn when to avail it and when not to. Most of you might not be aware of the fact that there is a wrong and right time to sign up for the credit cards that offer reward points.
Know that most credit card companies (offering a reward scheme) will release a limited offer period where the points for registering are higher for specific months. They offer enticing incentives to the new customers just to increase their customer base.
Signing up for a reward credit card at the wrong time of the year could cost you about Rs.10,000-Rs.15,000 worth of missed rewards. Hope you don’t want that to happen. Obviously, you are applying for a credit card just to get those added features. So, it is important to wait and avail at the right time to get the maximum benefits. Basically, this is during August, November, or December. However, this differs depending on the issuer.
3. Redeem reward points regularly
A mistake most people tend to make with a credit card is to save reward points for a long time and then using the whole pile in a single go. This happens frequently with flyer miles and hotel points. Understand that every year the card issuers increase the points required for redeeming against things of value. Therefore, over a period, the points will turn less valuable even if you accumulate a lot of them.
To overcome this, always make it a habit to check the reward points that are gained with the card frequently and try to utilise them regularly. Also, pay attention to the expiry dates of the points, because there is nothing worse than seeing those hard-earned points go in vain.
4. Use an online portal that offers cashback
Each time you make a purchase online, the possibilities of earning additional points also increase, especially on cashback, miles, etc. Most credit card banks will have their own shopping portals from which purchases can be made. Or, you can shop at online stores that offer the option of cashback.
Though credit card reward points will differ from one shopping website to the other, researching about them beforehand could be of great help.
5. Utilise bonus opportunities
Credit card bonus is an amazing way to double or sometimes, triple the overall reward earnings. Most issuers will offer high cashback return rates on a quarterly basis in selected categories, usually the ones that are seasonal. So, always pay attention to those opportunities and don’t miss the chance of earning bonus points.
Say, for instance, a credit card company might unexpectedly increase the summer gas purchases by 5%, perhaps because it is a peak or seasonal driving period. On the other hand, a few companies may reward their customers with additional travel purchases during winter holidays.
To register for such quarterly cashback schemes, it is important that you watch out for the official mailings or other alerts that the issuer sends.
6. Focus more on food and grocery
Although it is quite tempting to sign up for credit cards which offer extra reward points for specific purchases, a mistake most do is to buy too many cards. A common misconception is that the more the number of credit cards a person has, the more are the chances of gathering the points. Yes, it is true in one perspective, but the perils of maintaining every card can turn out to be challenging.
Instead, have a card that offers the maximum valuable reward points for the purchase you do the most. One good example of this is “food.” Eating at restaurants has become more common these days and if this sounds more like you, then look for a card with outstanding returns on the money you spend at restaurants, grocery stores, or both.
7. Maximise benefits during the interest-free period
Typically, credit card companies will offer interest-free period on transactions between the range of 15 and 50 days. This duration usually falls from the transaction date and the due date to pay it back. There is no interest charged on the transaction within this duration, given that you pay back the whole outstanding bill before the mentioned due date.
Let’s comprehend this with an example. Assume that the billing cycle begins on the 5th of each month and the due date ends on the 25th of each month. Now, if the cardholder makes a transaction on the 7th of October, then the billing date will be on 4th of November, and the repayment will be within 24th of November without any interest.
In such cases, the cardholder can enjoy an interest-free period for about 48 days. However, if the transaction is made on the 30th of October, then the due date will be 24th of November. In such cases, the interest-free period works only for 24 days and not more.
Therefore, always make bigger card purchases at the initial time of the billing cycle, as this will give the cardholder good amount of time to repay the dues. Same way, if there are two or three cards with dissimilar due dates, then make sure to distribute the transactions in a way that everything falls under the initial time of the billing cycle.
(This story has not been created by the editorial team.)