Boosting Your Spending Power with Credit Card Rewards Programs

Finding extra money in one’s monthly budget is a puzzle many of us are challenged with. For some, this puzzle is a daunting task. For others, it becomes an engaging fascination. One way to surmount the potential stress of boosting monthly spending power is to look for ways to save on existing monthly expenses.

That’s budgeting 101—not what we’re here to talk about. Finding ways to offset expenses by earning cashback on the other hand—that’s a bit more creative. Credit cards offer a wide range of rewards programs to attract new members. These programs range from travel rewards, cash-back, to more complicated and ever-shifting points programs.

Credit card rewards programs can help make monthly budgets more flexible without cutting back on purchases. For example, shopping at certain grocery stores may earn you triple points which can be redeemed for other expenses. Other programs may offer twice the cashback amount compared with similar cards. Ultimately, finding the best rewards program will come down to knowing your spending habits and finding the one best-catered to those.

Types of Credit Card Rewards Programs

In most cases, credit card rewards programs offer membership rewards. These can be thought of as a sort of proprietary currency system. These rewards can be “spent” for things like paying against your monthly statement, paying with points during checkout at qualifying stores, upgrading or purchasing airline tickets, as well as many more options. Below are a few of the common ways in which rewards can be redeemed.

Points Rewards

Points-based rewards have a very close relationship with your spending amount. A common structure is for every dollar spent your credit card will issue a point, often calculated with a multiplier. For example, 4 rewards points for every dollar spent. In these cases, it pays to shop around for cards that offer better rewards points multipliers for places where you shop often. For example, the Amex Rose Gold Card offers 4x rewards points on purchases spent at U.S. supermarkets.

Travel Rewards

Travel rewards are rewards points that can be redeemed to buy (or upgrade) airline tickets. Finding the best travel rewards program should be prioritized for anyone that frequents airline travel. Travel rewards programs range in what they offer. For example, the Chase Sapphire Reserve card offers an annual travel credit of $300 as reimbursement for travel-related expenses, a 3x rewards multiplier on dining and travel worldwide, and eliminates foreign transaction fees.

Tiered Rewards vs. Flat Rewards

Rewards points are earned in one of two ways: flat rates and tiered structures. The flat-rate approach is simple enough—you earn a fixed percent of your spending amount. This is common among cash-back credit cards or those that offer gift-card redemptions. Other rewards programs, such as points earned during dining, shopping, or traveling, vary between cards. One rewards program may offer 4x rewards points for travel and 2x for dining while another may offer 2x for travel and 4x for dining. Keep this in mind when considering which card is best suited for your spending habits.

Things to Keep in Mind

Credit card rewards programs are commonplace in the market now. All major credit cards are likely to have some program and they’re likely to be similar. Shopping around for the best rewards program isn’t about upper your tax bracket—it’s about optimizing and maximizing your monthly spending power. However, there are some aspects of different programs that one should always take into consideration.

Yearly Membership Fees

Annual fees range from $0 up into the hundreds or thousands depending on which card you are considering. For example, the American Express Centurion card has a $5,000 annual membership fee and a $10,000 initiation fee. That card is an extreme example but it pays to know how much you might be on the hook for each year for whichever card you are considering.

APR Rates

Annual Percentage Rates (APR) is a somewhat misleading term because of its relevancy to monthly balances. The APR is the interest rate you pay on the money your credit card company has “loaned” you for that month. Most major credit card programs are going to have comparable APR rates. However, if you often carry balances over between months it could be prudent to spend more time focused on this attribute while comparing credit cards.

Bonus Point Spending Requirements

Bonus points—they are the hallmark characteristic of many credit card advertising campaigns. When you sign up for a new credit card there is a good chance you’ll qualify for a fixed amount of rewards points—often with a comparable cash value of a few hundred dollars. Many, if not all, of these promotions, come with some conditions based on your spending.

For example, you may only get to keep those 50,000 rewards points if you spend $4,000 in the first three months. Knowing your average monthly spend can help you easily ensure you won’t have trouble qualifying for sign-up bonus points. One other approach is to time large purchases like appliances with new card signups.

The post Boosting Your Spending Power with Credit Card Rewards Programs appeared first on Home Business Magazine.

Original source: https://homebusinessmag.com/money/personal-finance/boosting-spending-power-credit-card-rewards-programs/


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