Want a free trip to Australia? How about Paris, London, Moscow or Beijing? With point and mile rewards credit cards, your potential destinations are endless.
With the right spending strategy, point or mile rewards credit cards can help you travel the world for next to nothing, or earn other perks on your purchases. Use them wisely, though, because even the best credit card reward programs might have dangers that can sneak up on you if you aren't paying attention to their terms and conditions.
How do point and mile reward credit cards work?
First of all, what are points? Rewards credit cards grant you points when you meet certain sets of conditions. Spending in particular purchase categories, or at particular retailers, earns you a tally of points that you can redeem when you want to collect the rewards that card issuers offer.
Rewards credit cards that offer miles work in much the same way, but they compensate you for your spending with points that are redeemable specifically for air travel. The limitations on how you use your rewards may make it seem like these aren't the best credit cards, but miles can often rack up faster than all-purpose points.
The way to score points and miles is simple: Use your rewards credit card for the type of purchases indicated on your credit card application. Your rewards stack up at a percentage rate to the dollar -- anywhere between 33 and 200 percent -- and grow faster with certain purchases than others.
Most point and mile rewards credit cards also come with large lump-sum bonuses at sign-up, or when you reach a preset spending total. Combining these bonus amounts with the steady trickle of rewards earned through everyday credit card spending can lead to a considerable amount of points or miles in a fairly short time.
Best rewards credit card strategies
There exists a small group of savvy credit customers who play their rewards credit cards like pieces on a game board. These personal finance wizards know all the tricks for racking up the best credit card incentives without breaking the bank. Here are a few of their secrets:
- Use savings to hit spending targets - Since many rewards credit cards come with whopping point or mile bonuses once you've spent a certain amount, waiting until you've saved that amount to apply for credit can bring you massive rewards faster.
- Carry multiple cards - Nearly all of the point and mile programs offered on rewards credit cards will encourage customers to spend in specific areas, so arming yourself with a portfolio of cards can ensure that you'll be able to maximize your rewards at every spending destination.
- Stay on the lookout for sign-up bonuses - Rewards credit card experts have always got their eyes out for hefty bonuses offered at sign-up, since the small dip that can come to your credit score from closing an account is often offset by the thousands of points or miles that can be earned by opening one.
- Check for spending or redemption "hot-spots" - Some credit companies set up a schedule of occasions such as "double rewards day" and "triple redemption weekend" in order to further incentivize their rewards credit cards, so make sure to use these time-sensitive promotions to your advantage.
The keys to world travel and other perks are at your fingertips with point and mile rewards credit cards. If you're thinking to apply for credit, don't make the mistake of overlooking the best rewards credit card offers just because they might seem complicated.
As long as you use your credit wisely and read the terms and conditions on your credit card application, rewards credit cards can be an exciting way to add value to your everyday shopping.