NEW YORK (MainStreet) Credit cards aren't about debt. On the contrary, they're about credit -- spending money that you don't have today but will have tomorrow. Something else that credit cards are useful for? Getting more out of your money. This is the essence of what credit card reward programs are for: making the most out of money that you're going to spend anyway. We spoke to some credit experts to find out how you can get the most out of your credit card reward programs and thus, more out of your money.
Picking the Right Card
Getting the most out of a credit card rewards program begins with picking the right card for you. Erik Larson, Founder and CEO of NextAdvisor.com, a website that, among other things, has an application for helping you find the best credit card for you, thinks you ought to work backward to find the right card. "If you travel a lot, obviously you want a card with travel rewards," he said. "If you know that you buy a ton of groceries, you want a card that's going to give you a good rate on that."
Brian Kelly, founder of ThePointsGuy.com, is a little more straightforward. "There are three basic types of rewards cards," he points out. "Cash back, travel cards and transferrable points cards, which are a hybrid of the two." He prefers the last because of its flexibility. Still, he concedes "if you don't travel, you might as well get a cash back card."
Finally, Larson advises people who are carrying a balance or going to carry a balance -- something that he advises everyone to avoid -- to look more closely at APR than at rewards points. "You need to minimize the APR," he said. "Any interest that you pay is probably going to outweigh any rewards that you earn."
Still, for everyone else, "you absolutely need to get a rewards card."
"Intro bonuses are another thing to take into account," says Larson. This is when a credit card company offers you a special bonus just for signing up. For example, you might get $100 if you spend $500 in the first month. Others are more high ticket; for example, the Barclay Arrival Card, which gives you 40,000 points when you spend $1,000 in the first three months.
This is just another factor to put in when you're looking around for the right rewards card for you and your family. In many cases, credit card companies will waive the first year's membership fee if you hit this target.
Bonus points and a waived membership fee: what's not to like? This is definitely a feature that you should carefully consider when looking into the right rewards card.
Card in Hand
Once you have the card, it's important that you use it to maximize your benefits. In fact, it might not be a bad idea to have multiple credit cards for different types of purchases. "Some cards give cash back on groceries and gas," says Kelly. "Travel cards tend to be optimized for flights and give you elite bonus points if you spend a certain amount." The answer it seems, is less picking between this or that card, but making sure that you have a card for everything and use the cards the right way.
Another plastic weapon in your credit arsenal? The revolving points card, which features a different category every quarter. "You get 1% on everything but [the card] has 5% cash back on the rotating categories," says Larson. "A lot of them have department stores and online shopping and you get big cash back on that from October to December."
When it comes to using a rewards card one of the "tricks" is just using the thing. While you don't want to carry a balance, there's no reason that you can't use the appropriate rewards credit card to buy everything that you need, paying off the balance every time that you get a statement.
Put in a little bit of planning with regard to what cards there are going to be in your wallet, spend money with the right card on the right stuff and you're basically getting free money for the things that you need every time that you shop.
What could be better than that?
--Written by Nicholas Pell for MainStreet