Credit Card Rewards Can Help You Win Rewards But Also Put You Under Debt. Here’s how.

One of the simplest ways of capitalizing on all your credit card rewards is by knowing the ins and outs of your credit card rewards. 

Typically earned every time you purchase your credit card, these rewards help you save money on many of your routine purchases. These include dining, merchant store shopping, travel, etc., to name a few. 

But first, we need to understand the mechanics behind these rewards. So, stick around. 

Understanding The World Of Credit Card Rewards

Credit card companies have started including rewards program to bring in more customers. While some of these rewards are pointless, most of them are actually useful and can be used to get some amazing rewards. 

Now, the kind of rewards you can claim usually depends on the type of card you opt for. So, choosing the right card is crucial. Need help? Need to understand how they work? 

Here’s a list of the three types of credit card reward schemes available out there.

 1. Cashback

Depending on the type of credit card you choose, you can get cash back on a range of products, from groceries to food delivery. 

For instance, a cashback card for online bill payments awards cashback every time you make an online bill payment.

When you use a cashback card, you get a certain percentage of cash as a reward for spending on various items. Some cards allow you to collect points instead of directly providing a cashback on every transaction. 

These points can be collected over time and redeemed as cash later on.

 2. Credit Card Reward Points

These cards earn you reward points every time you use them to make a purchase. However, the value of the reward point varies depending on the card company you choose. 

This is why you, before getting a card, it’s good practice to confirm the value of the reward points with the issuer.

You can redeem credit card points to buy several products for free or get cash vouchers for restaurants, entertainment venues, and other things. 

Remember, credit card reward points come with an expiry date, so make sure you redeem them before they expire.

3. Credit Card Miles

When you apply for a miles rewards program on your credit card, you earn miles depending on your credit card spending. 

The maximum number of miles you can accumulate on your card typically depends on the value set by your card company and the partner airlines. 

When you accumulate sufficient miles, you usually get a free airline ticket.

Take note that the number of miles required for a ticket depends on a few factors. This includes your travel destination, whether you’re travelling during the peak season, and also the cost of the ticket without miles.

How To Find The Best Credit Card Rewards

There are numerous variations of credit card rewards. Each of them caters to a specific niche. Therefore, understanding this key aspect is crucial.

We have already discussed the three primary forms of credit card rewards. However, we have included some points regarding the right process for choosing a credit card reward. 

However, you must remember that choosing and finding the right credit card reward is not a linear affair. Therefore, expect to go back and forth quite several times before you land on the right credit card reward for yourself. 

Therefore, follow along. 

Analyze Your Spending Habits

The foremost thing that you need to do is analyze your spending habit. Knowing your spending habits is a very important part of the process. In fact, credit card rewards take advantage of this aspect. 

Identify the pillar that takes up most of your funds. Like for example, you are a heavy spender in grocery. Hence, use a credit card that provides the most reward in that section. 

Moreover, identifying your spending habits will also help you understand your spending bracket. Sometimes, you are expected to spend a certain amount to win bonuses. 

Therefore, understanding your spending habits is the key. It will help you create a preference list. 

Check Score

The next thing that you need to do is understand your credit score. A credit score is an important marker for the financial community. A credit score shows how consistent you are in handling debts.

Most credit card companies require a score of at least 670 to qualify for rewards and owning a card.  Therefore, be very vigilant and conscious about your credit score. 

Look at the detailed requirement list of credit card companies before deciding to go with one. Do your research on respective credit card rewards before settling down. This will save you time as well as money in the long run. 

Are They Worth It?

Credit card rewards are simply amazing. They reward you for spending money. This ingenious marketing tactic allows credit companies to reward their highest spender. 

Then again, this whole system is created to keep the credit card companies in the profit. Therefore, these reward programs might seem alluring at first, but they come with their own hidden agendas. 

This final section will discuss some of these pros and cons so that you know better. Here we go!

• Pro:  Users can receive rewards for daily purchases. These rewards are often handsome and can really help you out. Sometimes, you can even receive around 5% returns on your purchase. 
• Con: Credit card companies developed the concept of credit card rewards to push people to spend more. Subsequently charging a higher rate of interest. Therefore, you will end up paying more in the long run. 
• Pro: Credit cards not only offer benefits, but they also offer buyers insurance. Therefore, if you buy something using your credit card, you might be automatically insured.  
• Con: Credit card reward systems are designed to enable overspending. This can be a dangerous concoction for someone with a spending problem.  

Conclusion

Credit card rewards in the form of cashback, reward points, and miles offer you benefits depending on your spending habits and the terms of your card company. 

Institutions like the IndusInd Bank even offer personalized credit cards with higher limits, making card transactions even more convenient. 

So, what are you waiting for? Get a credit card and apply for a suitable rewards program today!

Additional Reading:

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