Boosting your redemption power on reward cards

It is difficult to imagine a credit card today that does not offer some type reward to its holder on its use. Credit card companies on credit cards and banks on their bank cards offer points each time the customer makes a qualifying purchase. The purchase could be small as shopping for a gallon of milk at a grocery store to something pricier such as making repairs to your car at a car dealership service facility. In any case, the card companies want your loyalty and will reward you for your repeated business. If you pay cash for your purchase, you won't earn the extra incentives associated for the purchases.

From a shopper's perspective, the idea behind a reward's program is to earn points and many points as possible. When the shopper earns enough points for a particular redemption level, he can have the points redeemed for travel, merchandise, gift cards, and so on. Did I say for free? So why not turn shopping or baking activities into reward-earning opportunities? So rewards gives you one more reason to use the plastic.

Although the rewards points sound attractive for receiving perks, they can be worthless or costly if you don't play the game right. Here are some points to keep in mind to maximize your rewards programs to your advantage:

• Do not make purchases just to earn points or miles. Remember if the money is coming from a credit card, it is borrowed money. That means it will need to be repaid at some point in the future. If you are spending checking or savings account money, it is still your money.
• Avoid reward programs that charge you a fee. If you have to pay annual or sign-up fee, know that you will save more than what it will cost you to join the program. If the annual cost to join is $50, but you think you will earn only about $40 in points during your membership year, it probably won't make sense to join the program.
• Consider paying with a credit card when you know you can pay the full amount later without any interest or in other fees. The idea is to maximize the rewards and this is done well when there are no additional associated costs.
• Remember to read the fine print. Know of any expiration or other limits imposed on the rewards. Keeping yourself informed will help you protect and extend the value of your hard-earned reward points.
• Enroll in or use a rewards program that offers you the best chance of achieving the desired level of reward. Don't pay attention to just points for a dollar. Know also how much points you have to earn to redeem for desired selection. Assume you want a $50 gift credit card. With some credit card companies, you can be charged 6,000 points but others charge you only 5,000. Obviously, you want a program that earns you the maximum points (in this case $50 gift card) while keeping your cost down (of not just only points but also overall cost).
• If you have multiple rewards cards, use your cards in ways that maximize your benefit on purchase-specific programs. If your particular credit card gives you 5 points on gas station purchases, consider using that for gas purchases exclusively. If you get more points on grocery purchases from a card other than your gas card, consider using your other card. Grocery and gas purchases are both necessary and frequent. As such, you can earn enough points for desired redemptions on separate cards without fearing restrictions or expirations. However, if you believe you won’t earn enough points for a desired redemption with separate card purchases, consider using just one program.

There are vast numbers of options when it comes to rewards. Banks, credit card companies, retail stores, and many more businesses offer them to their customers for repeat business. As a shopper, you want to maximize such opportunities to your benefit. Here is an overview of some popular rewards points programs:

• Banking rewards. More and more banks now offer rewards on your banking activities. For example, if you make a direct deposit, you earn a point; if you make purchases with your check card, you earn points.
• Travel rewards. Car-rental companies, hotels, airlines offer rewards programs that allow you to earn points toward free travel, hotel stays, or upgrades.
• Credit card rewards. Every major credit card issuer offers rewards points program to the credit card holder. The reward choices include statement credits, cash-backs, gift cards, checks, travel, and merchandise.
• Retail rewards. These days supermarkets and other major retailers offer a rewards program generally in the form of discounts.

Remember to carefully read the terms and condition of the program offered. Familiarizing yourself with the program is a great way to maximize your purchase power. If you have multiple reward options, know the pros and cons of each to help decide the best use of a reward program.

Posted on: 7:32:51 PM EDT November 2 2007

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