We’re all looking for ways to save, but what if you could also get rewards for all those freebies or travel plans you make? Credit card rewards sound like a good deal, offering points, miles, or even cash back for your purchases, but they can easily become a hassle.
“It could be a bargain if you use it wisely,” said Bankrate’s Ted Rossman. “It could also be a ticket to overspending.”
Rossman says the moment you fall behind on your credit card payments, those rewards just aren’t worth it.
“You’ll have to pay in full and you have to avoid interest to make it worth it,” Rossman said.
Rossman says that only about half of people who use credit cards make their payments on time and keep their balance low. So how can you make sure your cards are working for you?
If you have a cashback card in rotation, many of them will lean towards holiday shopping. See what kind of retailers they offer bonuses with and shop there. If you can choose a category for extra cash back or rewards, Rossman suggests choosing online shopping.
It can also be helpful to make a list of what you plan to buy and where you can get it from, to try and maximize your rewards. If you don’t have a card with holiday bonuses, Rossman still has some advice.
“Look for store coupons and maybe you go through one of these shopping portals like Rakuten or shop through Chase or many airlines have these portals,” Rossman said. “It’s affiliate marketing, but you get a return in the form of extra rewards.”
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And if you shop in store, you may be asked to open a store card in exchange for a discount. Rossman says if you have a really big order, it might be worth it, but make sure you understand the credit card terms before signing up.
“I did some research recently and found about 20 store cards that charge 29.99% interest,” Rossman said. “That’s an absolutely brutal interest rate.”
Remember, if you can’t afford it, be sure to use a credit card to get it.
“Credit cards are like power tools,” Rossman said. “They can be really useful, or they can be dangerous.”
Another reason to use credit cards when shopping online is for protection against scams. Some cards may also offer you purchase protections depending on what you buy, so make sure you know all the benefits associated with your credit card.