10 Ways to Maximize Your Credit Card Reward Points


NEW YORK (MainStreet) — Consumers are down to the wire when it comes to holiday shopping.

From gifts to travel plans, the holiday season is prime time for using credit card reward points, but it pays to put some strategy toward the reward points process.

Our personal finance experts shared 10 ways to make the most out of credit card reward points, just in time for the holiday season.

1. Fees

The goal of reward points is to help you score some “freebies,” or at least cut your shopping bill. It doesn’t make sense to have fees associated with these points.

And while fees to redeem credit card reward points are becoming less common, be wary of annual fees on credit cards that boast robust reward points. “You need to weigh the fee with how many points you're likely to build up and use,” says Carmen Wong Ulrich, president and co-founder of Alta Wealth Management.

“I was offered a rewards card upgrade on the 'gold' one I have now, but the annual fee would have increased from $79 to $450! Granted, I do ring up more than $450 worth of points annually, but in case I don't, I stuck with the $79 card to keep costs down. That way, I get the points anyway, no matter which card, and don't pay extra for other perks I won't use, such as airport lounges,” she adds.

2. It’s all about balance

You may have wondered if it’s best to save your reward points for a few years or redeem them as you earn them.

“Folks who 'hoard' tend to do it simply because they have no purpose assigned to the points. Unfortunately, those also tend to be folks who lose all those points that translate into 'free' money. Have a system where you have an expense that occurs once a year or several times over the year that you can use your points for specifically,” Wong Ulrich says.

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.

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