We all like to save make the most of our money. But how about earning money while spending it? Credit cards with a reward system do that exactly. Credit card points are credit card rewards. On certain purchases, cashback rewards yield a percentage of cash. On the other hand, credit card point systems give points per unit of money spent.
The points earned may differ on the type of purchase you make. Some credit card issuers have a fixed points system, where you get the same points regularly. On the other hand, other issuers rotate spending categories to reward certain purchases. It is usually on a monthly, quarterly, or yearly basis. Travel credit cards often offer more points for travel-related spending. For instance, a top rewards credit card will offer up to 10X points on specific categories of purchases and at least one point per dollar on all other purchases.
Different types of credit card reward points
Reward points are useful for everything. It can be redeemed for statement credits to online shopping. Some of them are as follows:
Cashback
Cashback credit cards return a percentage of your purchase price. Some flat-rate cash back cards reward all purchases at the same rate. However other cards give you higher cash back on specific purchases, such as groceries, travel, or gas.
Statement credits
On using Statement credit, the cash value of the rewards points goes credited into your account balance. This is not a common option that is always available, so check with your issuer about this feature if you want to utilize this plan.
Travel purchases
You can redeem the points and miles you earn on every qualifying travel expense, such as a plane ticket or a hotel room using a travel rewards card. In addition, many travel cards offer luxurious perks, like airport lounge access too. It’s common for credit cards company to let you transfer your rewards to travel loyalty programs.
Gift cards
Gift cards are the most preferable way to redeem your hard-earned rewards. You can choose from a list of options, such as entertainment or restaurants. Every issuer offers different gift card options to choose from. If you have cards from different issuers then you have multiple options or brands to choose from.
Online retailers
You can redeem your points with online retailers, like Amazon. However, there can be various restrictions while using points in this system.
Charitable donations
Some issuers allow you to donate your points to a charity or a nonprofit organization. This is a great way to help society by using credit rewards.
How do you earn credit card points?
There are a few things you can do to increase your earnings besides making purchases with your credit card. Here are some examples to make the most of it.
Maximize specific spending
You earn credit card points by making certain types of purchases using your credit card. Many credit card companies offer different point rates for specific purchases.
Sign-up bonuses
Grab that sign-up bonus that gives a large number of points at once. Generally, you have to meet certain spending criteria within the first few months of opening the card to claim the bonus. However, make sure this spending minimum will be able to work with your budget before signing up.
Referrals
Some companies offer referral bonuses to current cardholders who get a friend or relative to apply for the card. Typically, you will refer a friend via a link and receive a certain amount of points for the referral. In addition, the new joined also earns some bonus. So it is a win-win situation.
Choose what is best for you
When used wisely, credit cards can be a wonderful thing. But, try not to splurge on your credit card to earn reward points. It can be dangerous to overexert your credit limits so that you can buy some things for free. There is always a small cost attached to reward points. You might also end up getting the things you do not need to buy.
Analyze your credit card usage and then consider if you want to switch to another one after comparing all the issuer’s reward points. Choose what options seem best to you and fit your lifestyle. You should check on the expiry date of the points earned. All reward points have an expiry date. If you miss it, your points will be lost. Look for easy ways to redeem the reward points.
Most importantly, if the card-issuing company gives cash for your reward points, you could consider opting for it.