Make your Credit Card Rewarding

There are many reasons why people choose different credit cards and one is the possible rewards that they can obtain. Some rewards are in the form of cashback and others offer redemption schemes, such as air miles or points that can be traded-in at high street or online stores.

The forerunner of credit card rewards schemes was the frequent flyer miles initiatives, where in return for booking with a particular airline customers accumulated miles that could be traded in for free flights or upgrades. The success of those schemes led to the extension of the idea to credit card issuers, who decided that they could reward their customers for purchases made using their card.

Some providers offer cashback, normally offered at between 0.5% and 2.0% for participating credit cards, although there may be some promotional deals that offer a higher rate for a fixed period, or tiered schemes which reduce the cashback paid as spend increases. The cashback normally rolls up in the account and is paid annually to cardholder.

For those who possess the discipline to be able to use a credit card for their everyday spending such as food shopping, buying petrol and entertaining, affinity cards can indeed be very rewarding. Not only will you benefit from the credit rewards, but you effectively get an interest-free loan each month from the credit card company as you use it to cover your monthly expenses. So, you could deposit your monthly salary in an interest-bearing account until such time as you need it to pay your credit card bill.

The key to successfully maximising credit card rewards is ensuring that you pay off the balance religiously each month. Carrying forward a balance and paying interest would soon offset the advantage of receiving rewards. To ensure that you don’t miss a payment it is easy enough to set up a monthly direct debit. Most card providers offer the option to pay the minimum, the total balance or a fixed amount each month; to maximise your rewards you must choose ‘full balance’.

The other essential for those that are attracted by credit card reward schemes, such as air miles is that plenty of outlets accept the card and that the rewards are worth having. For example, there is no point in collecting rewards if you have to spend tens of thousands of pounds just to get a short domestic flight for free on which you would also have to pay taxes! Similarly, if the rewards are potentially great, but nowhere accepts that type of card then the scheme is worthless! Indeed, the trick is finding the most card with the best scheme that is accepted at the most outlets!

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

Adam Singleton writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.

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