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Research: How to make the most of credit card rewards -

Using credit card rewards to your benefit is an art. A lot of people clamor for credit cards that offer exceptional rewards. However, very few of them actually use the rewards to the fullest extent. This is where understanding what credit card rewards you need and what you don’t makes such a large difference. Here are some tips to understand and make the most out of credit card rewards.

The 0% introductory interest

Cardholders seldom use the 0% interest rate credit cards the way it should be. The 0% interest rate credit cards, especially those where you don’t have to pay interest even on the purchases you make month after month, are like interest free loans. In other words, if you get 0% interest rate for 12 months, instead of the usual 10 - 15%, on an outstanding balance of $1000 and an added $500 for purchases, you can save anywhere in the tune of $100 - $200 within a year’s time that can be used to repay the debt. However, most cardholders fail to check their expenses and repay their debt before the end of the introductory period. As a result they end up subjecting their outstanding debt to a high APR after the introductory period. The key is to draw up a minimum repayment plan, by which you can arrive at the amount you should repay every month to pay off the debt within the introductory period.

Cash back rewards

If you want to make the most out of the cash back offer, you will have to look for the credit card that offers unlimited cash back. A lot of credit cards slap limits and caps on the amount of cash back you can claim every month and every year. Such cards don’t benefit you a lot. Even 2% cash back will save you more than $200 a year if your monthly expenses are in the tune of $1000. If you are on vacation or on a shopping spree you might save even more. It is also important to note the cash back categories. You need to avail cash back if it is offered for buying from specific retail stores. Similarly, some cash back offers are available only on online purchases. Understanding these terms helps you make the most out of your rewards.

Travel rewards

Travel reward cards are for those who fly a lot. There could be an annual fee in excess of $100 on these cards. But, if you fly almost every alternate week, you will end up saving much more than that. Travel rewards include discounts on hotel stay with hospitality chains that have tie ups with your credit card brand. Similarly, there are discounts on air tickets, holiday packages and restaurant bills all of which sum up to quite a bit of saving. However, if you chase a travel reward card without being an enthusiastic traveler yourself, you might end up paying the high annual fee without availing any of the travel discounts on offer.