Best ways to use credit card rewards to your advantage

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Credit cards have the dubious reputation of being the gateway to debt. And while it may be the case for some people, credit cards are actually extremely useful when used wisely! They help you maintain your monthly cash flow, they are a good alternative to carrying a lot of cash, and they make life easier.

If used strategically, credit cards are a great financial product to have. Especially, if you know how to use the rewards you earn to your advantage!

1.    Look out for Sign-up Bonuses

With so many credit cards in the market, it comes as no surprise that card issuers offer prizes and gifts when you apply for their card. While gifts like free luggage are great, it’s always better to sign up for a credit card that offers you reward points or miles as a welcome gift. This way, just by signing on the dotted line, you have already accumulated a sizable number of points.

Take, for instance, the Citi PremierMiles Visa Card, new Citi cardholders get 30,000 Citi Miles when they sign up for this credit card. Of course, you do have to spend S$7,500 within the first 3 months of your card being approved, but it’s still a great deal because 30,000 Citi Miles is enough for you to redeem round trip tickets (Economy Advantage) to Indonesia!

In fact, there are cards that offer cashback and reward points as welcome gifts without you having to spend anything at all! For example, with the Standard Chartered Spree Credit Card, you get S$100 cashback when you apply for the card!

2.    Ensure That Your Points Are Transferable

The best way to maximise your points is to ensure that you can transfer your points to multiple hotel and airline partners.

If you can transfer points to only one airline, then you lose out if you plan to travel with a different airline. Let’s assume that your credit card allows you to convert points to miles only with Singapore Airlines. After conversion, you have 20,000 KrisFlyer miles. However, while booking tickets for your holiday to Hong Kong, you realise it makes more monetary sense to book your tickets on another airline. In this instance, you have lost out on using those air miles.

Similarly with hotel points. Ensure that your reward points can be converted to hotel loyalty programme points so that you can make the most of your stay without having to spend much!

The bottom line: Multiple transfer partners gives you the privilege of choice and the opportunity to maximise your reward points.

3.    Double Dip to Get Twice the Points

The best way to maximise your reward points is to double dip! For the uninitiated, double dipping is the process of using your credit card to earn rewards on your card as well as rewards for your travel and shopping.

Confused?

Well, let’s say that you have the American Express Platinum Credit Card. Let’s also assume that you are a member of Hilton’s loyalty programme – Hilton Honors. Each time you book a stay via the Hilton Honors portal you earn hotel points. Not just that, but if you charge your stay to your credit card, then you also earn points for that booking.

You can do this with cashback cards as well. Shop via a cashback site like RebateMango with your credit card and you not only get the cashback that is promised on your card, but you also get cashback via the website.

4.    Mix Business and Pleasure If You Are Self-Employed

If you run your own business and have a lot of work-related expenses, then it would make sense to charge those expenses to your credit card and accumulate rewards.

Once you have a sizable number of points, you can convert them to air miles and redeem them for a vacation for you and your family! You could also redeem your points for retail, dining, or travel vouchers!

5.    Create a Budget for Your Points

If you have two credit cards that earn reward points and one that is a cashback card, it is important to create a budget for your points.

How do you do this?

Well, first you need to determine the cap on the points that you can earn for both your credit cards. Once you have done this, go to the rewards page and see if there is something that you would like to eventually buy and the points that are required for it. Now, that you know what you need, charge your card until you reach the points threshold you have set for yourself.

So, if you have a UOB card and while going through the rewards page you come across the S$100 voucher from Bang & Olufsen, you know that you need to earn UNI$ 10,000. Once you reach that limit, switch your card and use your cashback card instead.

This way you are only accumulating usable points and not orphan points that are about to expire and you can’t do much with.

The bottom line: Make sure that the points you earn are usable. Once you reach the points limit set, switch to a cashback card.

6.    Get a Credit Card That Rewards Your Spends

Even if you follow all the 5 tips stated above, you may not be able to maximise your rewards if you don’t think about this step. You see, at the heart of it, a credit card is only useful if it rewards your spends.

Which means that if you are a frequent traveller, get yourself a credit card that rewards not only your flight bookings, but also hotel stays, online spends, and foreign currency transactions. If you are someone who uses their credit card for their everyday spending, then you should get a cashback or cash rebate credit card that allows you to save on groceries and recurring bills.

Something else to keep in mind is to ensure that you don’t have just one card for your spending. Multiple credit cards ensure that you get the most out of every dollar that you spend. So, you could use a travel credit card to book your flight tickets and a cash rebate card for dining discounts. And while you may not see how this makes any monetary sense in the present, you will end up saving quite a bit in the long run!

As you can see credit cards are not only useful, but they are also rewarding. And maximising the rewards on your credit card doesn’t have to be a guessing game. It is, in fact, a science that requires a little bit of strategizing on your part. And if you think science isn’t for you, then worry not! Just go through this article and you will be on the road to using credit card rewards to your advantage!

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