Understanding how your credit card rewards work can help you make the most of this benefit. Deidre Davis, MSUFCU Chief Marketing Officer, shares ways to ensure you're maximizing your rewards.
Cash-back credit cards are among the most convenient and flexible rewards cards. They offer cash back based on the amount you spend. Some cards offer a certain percentage of cash back for all purchases while others may offer different percentages based on the types of purchases such as travel, grocery, or retail.
First, make sure you have a credit card with rewards that match your spending habits. For example, if you are an avid traveler, you could benefit from a card offering airline miles or travel points. If you shop at a particular retailer, a card connected to the merchant that offers discounts on store purchases may make sense. If you spend the most money on groceries and gas, a card that offers a high cash-back percentage in those categories might be the best fit for you.
You also should look for cards that offer a set amount of cash back on all purchases regardless of category. Even if the percentage of cashback is lower than category-specific cashback, a card that offers this general option will ensure you will receive some reward no matter what you’re buying.
Use your card to get your rewards but also pay off the balance quickly. And, if the rewards increase when you spend more, this doesn't mean you should spend more. Use the card for purchases you already plan to make. If you can pay off the card balance each month, you will reap the rewards and save money on interest.
Having multiple cards can be challenging but it also can be another way to maximize rewards. For example, you could use one card that offers cash back on all transactions for everyday purchases and use a store-specific rewards card to earn discounts at that particular retailer. You might also add a travel rewards card so you can collect airline miles.
The bottom line is you should review your budget — and your goals — to determine the combination of rewards cards that works best for you. In addition, you can avoid adding debt by keeping track of your spending.
Generally, the more you use your cash-back credit card, the greater your rewards. However, this should not mean spending money outside your budget. Instead, use it as a strategy. If you plan to make a large purchase, see if it would pay to put that transaction on your cash-back card and see how much you might receive in return.
Also, consider creative ways to use your cashback. It could help you build an emergency fund or pay off other debts and expenses.
MSUFCU has great cash-back credit card options. Their Visa Signature® Credit Card offers unlimited cash back on every purchase: 3% on groceries; 2% on gas, travel, and universities; and 1% on all other purchases. They also offer our Platinum Plus Visa Credit Card with 1% cash back on all purchases.
To learn more, visit msufcu.org.
This segment is sponsored by MSUFCU.
