Expenses such as an annual family vacation, a first-class ticket or hotel room upgrade or gifts for family, Wong Ulrich says, should be left for reward points.
3. Buying “stuff” with points
Take a close look at the reward points program from your credit card issuer. If you’re thinking of redeeming points for merchandise from the credit card’s online store, you may not score the best deal. “As for the value of the catalogs, it's negligible because you could probably find the same items for much less and possibly better quality by using price comparison sites and promo codes,” Wong Ulrich adds. 4. Reward points equal gift cards
Gift cards are expected to be the most popular holiday gifts this year, with sales reaching almost $29 billion, according to the National Retail Federation.
Redeem your points for gift cards – whether universal gift cards from a credit card company or cards to specific stores. You can give these as gifts or use the cards to buy items and give those as gifts.
In some cases, the ratio between points and gift card value is better than redeeming the points for actual items from the credit card issuer’s online store.
5. Converting airline miles
If you’ve got a ton of airline miles but no plans to travel soon, don’t let those miles go to waste. Instead of scrambling to book a last-minute trip, you can convert those miles into reward points to be redeemed for more general items, such as gift cards.
“Many people think airline miles can only be used to buy airline tickets. That's not the case. Delta, for example, has their SkyMiles Marketplace, where SkyMiles can be used for gift cards and goods ranging from electronics to food and wine,” says John Ulzheimer, president of consumer education for Smart Credit.
6. Donating reward points
If you’re strapped for cash and can’t make monetary donations, you can actually donate your reward points.
“Your card company should have a place online to do this. If not, consider turning rewards into gift cards and donating those,” Wong Ulrich suggests.
7. Choosing the best rewards program
If you’re new to the reward points world or happen to be looking for a new credit card with a more robust rewards program, maximizing reward points ultimately comes down to matching a specific card to your lifestyle.
“If you have a family and a long commute, you may have large grocery and gas bills, so find the best cards that offer 2% or 3% back on gas and groceries,” Wong Ulrich says.
8. Don’t open up cards just for the rewards
You may stumble upon attractive credit card offers that promise 50,000 or even 100,000 bonus points when you sign up for the card. If you already have a half-dozen credit cards with debt across each card, do you really want to open up another?
Anecdotally, the more credit cards you have, the greater the temptation to spend – which puts you at risk for more debt.
9. Don’t spend just to earn rewards
If you think of reward-points programs as a game and start charging up more than you can handle for the sake of accumulating points, you’re going to find yourself in financial ruin.
Justifying large purchases on the heels of gaining reward points is not a healthy mentality for your money. Remember, if you leave a balance on the card, the interest costs kick in, which means any financial benefit from those rewards is dissolved.
10. You have to pay the bill
Speaking of paying the bill on time, keep in mind that to actually redeem the reward points you accumulate, you need to pay the bill first. This is why you need to have the cash on hand to support all of your credit card purchases.