Credit cards are a big business. According to studies conducted in 2014, 89% of Canadian adults carry at least one of the 72 million Visa and MasterCard credit cards in circulation. Credit cards are the payment method of choice for an overwhelming majority and that’s in no small part due to the reward incentives that many of these cards offer.
These rewards — points, cash back, or one-time signup bonuses — can add up to a significant amount of free money for making everyday purchases. Here are a few ways you can make the most of your credit card rewards:
Stick to a card that matches your lifestyle
Credit cards rewards generally fall under three categories: travel, cash back, or store credit cards. A travel rewards card would be of no use if you rarely travel. Examine your spending habits and retailer preferences to see which program aligns with your goals. Use the card of choice to pay for everything to maximize benefits.
Double up on points
If your credit card of choice is linked with a specific credit card rewards program, don’t forget to swipe the loyalty card every time you make a purchase. The loyalty cards are designed to work together with the affiliated credit cards so you can earn rewards faster. Forgetting the loyalty cards at home means you’re losing points when you check out at the register.
Buy gift cards to reach spending bonuses
Most credit cards offer lucrative signing bonuses worth several hundred dollars once you exceed spending minimums within a set period, often the first 90 days. Purchasing gift cards from specific retailers can help you reach those minimums where some forms of payment are not accepted.
Remember the other perks
Take full advantage of your credit card features so that you’re not spending money when it isn’t necessary. With price protection, you could get back the difference from your credit card company on big ticket purchases like that TV that just dropped to $999 from $1,200. If you’ve paid for your travel in full using a credit card, you might not need to buy additional trip or medical insurance. Be sure to check the fine print to understand any limitations so there are no surprises.
The last word
Credit card rewards certainly have their benefits but do come at a cost. Cards that offer rewards come with annual fees. If rewards translate to 2% of total spending, you’d have to spend $5,000 to cover a $100 annual fee before the benefit starts to kick in. If it’s not worth it, cancel the card within the first year to avoid paying the fee.
Neglecting to pay off balances in full each month can also incur late fees, a loss of rewards and interest rates as high as 30%. No rewards are worth taking on an increase in debt.
When used properly, credit card rewards are a powerful device in your financial toolbox. Taking a minute to explore the possibilities can mean extra money in your pocket for you to enjoy. Check out Ratehub.ca’s credit card rewards comparison tool to find the card that best suits your needs and start earning rewards today!