When you’re planning a dream vacation, it can seem like the cost could drain your bank account. But it doesn’t have to if you know how to use your credit card to its full advantage.
Using credit card rewards strategically may help you turn every grocery trip, gas purchase, and other everyday spending into flights, hotel stays and more. When you understand how different credit cards work, you can use their unique benefits to your advantage to help plan your next adventure.
Match your card to your purchases
Whether you’re looking for a new credit card or you already have a couple in your wallet, review their rewards programs and match the card to how you spend. For example, use a card that offers 3X points rewards on dining every time you go out for dinner or order takeout, and another that offers 4X points on supermarket purchases every time you need to grab items at the grocery store.
This strategic approach can help you quickly accumulate more rewards without altering how you shop.
Take advantage of sign-up bonuses
When you get a new credit card, pay attention to the sign-up or welcome offer, if there is one. These offers can typically provide a large rewards windfall for meeting a spending threshold within a certain amount of time.
For example, a card may offer 75,000 bonus points when you spend $6,000 in the first six months. If you put all your everyday expenses on your new credit card, or if you time opening a new card to coincide with a large purchase you need to make, you may be able to easily meet the required spending amount and reap the rewards. Just remember to stick to your budget and don’t chase a spending threshold you otherwise couldn’t afford. If you wind up carrying debt month-to-month, it will accrue interest, which could eat into the rewards you earn.
Use travel portals
Most credit card issuers have an online travel portal where you can book flights, hotels, rental cars or more using the rewards you’ve earned. Sometimes redeeming directly through the portal gives you the most value for your points, but other times it may make sense to transfer your points to one of the card’s airline or hotel partners.
Redeem transferable points
Some card issuers may have transferable or flexible rewards programs. This can allow you to transfer points to airline or hotel loyalty programs that provide more value for your points than you would receive when redeeming them for a statement credit or cash back. Before you redeem, calculate the value of your points to ensure you’re making the most of them.
Use your card’s travel perks
On top of earning rewards, check your card’s other perks and benefits to see if any may help you save money or make your trip more comfortable. For travel credit cards, some of the most popular perks include:
- Airport lounge access
- Waived checked bag fees
- Priority boarding
- Trip cancellation insurance
Using your credit card wisely to take your rewards further
How you spend is just one aspect of maximizing your credit card to earn rewards. How you use your card is another important part of getting the most out of your rewards.
Pay your bill in full each month
When you carry a balance on your credit card, it accrues interest, making your purchases more expensive than if you had paid in cash. Interest can also quickly offset some or all of the rewards you earned for making those purchases. But you may be able to avoid interest charges if you pay your balance on time and in full each month.
Your best bet: Treat your credit card just like a debit card. Only put purchases on your card that you’d be able to pay for with cash in your bank account. Then, pay off your bill immediately once you receive your statement.
Pay attention to your annual fee
Annual fees are a yearly fee some card issuers charge to use the card and take advantage of its benefits. Typically speaking, the higher the annual fee, the more rewards or better perks the card offers.
If your card has an annual fee, or you’re applying for a new card with one, look at how much the fee is and compare that against the value of the rewards you earn or the benefits you’re getting. If the fee is more than you’re earning back, the card is costing you money and likely isn’t the right fit for you.
Your perfect trip is just around the corner
Maximizing your credit card rewards isn’t only about how much you can spend. Look for cards that align with your regular spending habits and offer achievable welcome bonuses. Consider whether your rewards are more valuable to redeem for flights or hotels at your travel destination, or if a statement credit or cash back would give you more bang for your buck. These simple tricks can bring you one step closer to touching down for the adventure of your dreams.
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