Credit cards have the power to make life easier. They can streamline daily purchases, such as gas and groceries, and score you deals on larger purchases, such as airline tickets and hotel bookings. Beyond the ease of paying for things, are you getting the most out of what your credit card has to offer?
While many cardholders might choose a credit card because of the rewards that it offers, when it comes time to cash in on those rewards, they don’t do it. Multiple surveys—including those in 2017 and 2021—have found that almost a third of cardholders don’t redeem their rewards. Too many people are leaving money behind.
Another survey found multiple reasons why people don’t redeem their awards, the biggest being that they are busy, they don’t fully understand the rewards programs or they don’t see the benefits. If any of these describes you, here’s how to make sure you’re getting the most out of your rewards.
Get to Know Your Rewards Program
You can’t redeem your rewards if you don’t know how your rewards program works, so read your agreement and learn how rewards accumulate. Some programs offer rewards for each purchase, while others calculate rewards on a monthly or quarterly basis.
Some rewards require action on your part, like redeeming points or airline miles. By far the easiest reward to manage is cash back. Cards with these rewards programs will automatically issue an account credit for all cash back earned each billing cycle—which means you won’t have to worry about getting confused or forgetting to use your rewards.
If your rewards program does require action on your part, make sure to use your bank’s app and online services to check your rewards regularly—or use one of the many third-party apps. To get into the habit, check your rewards each time you pay your balance.
Choose a Card With Rewards You’ll Actually Use
There are several different rewards programs out there, and not all of them will align with your spending and saving habits. For this reason, you should make sure to apply for a card with a rewards program that makes sense for your life.
The most common rewards are cash back, airline miles and points. Cash back allows you to redeem your rewards for a statement credit or cash. Airline miles are a type of currency that can be redeemed for travel or other rewards, sometimes even cash back. Points are another type of currency that can usually be redeemed in multiple ways, including cash back or merchandise credit at a particular store.
Chose the rewards that work for you. For example, if your card offers hotel points or airlines miles but you don’t travel often, you’re unlikely to use the reward unless there are other ways to redeem those rewards. Points may offer more flexibility, while cash back, as mentioned, is usually the easiest option.
Make Time to Redeem Your Rewards
If your card doesn’t offer automatic cash back, you should make time to review and redeem your rewards each month.
Consider this one part of your overall financial plan. If you have a specific time each week or month when you track your spending and pay bills, check on your rewards as a part of the process. Keep in mind that some rewards expire, so make a plan to redeem them before they go.
What it all comes down to is not losing out on rewards that you have earned, so make the effort to redeem them, because every penny matters.
William Myers is a financial writer based in Dallas.
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