Using reward credit cards wisely

As with any credit card, it is important to use reward credit cards wisely. You should carefully consider what kind of rewards you want, as well as consider whether you will use them. Indeed, it is important to carefully decide what kind of rewards program you sign up with, since you may not be able to change things later.

There are, however, reward credit cards that come with what are called "flexible" rewards. These types of programs do not pigeonhole you into one type of reward. You can choose cash back one time, and then another time decide on airline travel miles. You should, however, check to see what kinds of penalties you might incur for changing the rewards you want.

Another thing to remember in your wise use of reward credit cards is to pay off your balance every month if possible. Credit cards often charge interest rates that are relatively high. If you are not careful, you will actually end up paying so much in interest fees and charges that it will negate the value of your rewards. It is best to buy only what you can afford, only purchase items you would have bought anyway, and to pay off your balances as soon as you can.

Things to watch out for with reward credit cards

While there are many advantages to reward credit cards, there are also some pitfalls. Make sure you read the credit card agreement, and understand the terms of your rewards credit card. Here are some of the issues that may make dealing with your reward credit cards more difficult:

• Qualified purchases. Not everything you buy may provide you with reward points. Sometimes only things like groceries apply. Other times, you may not get reward points at the gas station. Check to see whether there are limits to what purchases qualify for reward points. Another thing to check for is whether you get double points for frequenting certain merchants, or following up on certain deals.
• Expired points. Sometimes, reward points expire. Some card issuers have points that are good for only three or five years. This means that if you do not use them within the allotted time, you could lose them. Check your agreement and try to choose reward credit cards that do not have an expiration on the points.
• Use at specific vendors. In some cases, you may have to use certain vendors or service providers. This can be especially true if you have travel points. You may also be required to get a certain model of merchandise if you are getting those types of rewards.
• Blackout dates. These are especially common with travel reward credit cards. You may not be allowed to use your points during certain times of the week or year. Sometimes, you will not be able to use points for specific popular events, or get merchandise during the holiday shopping season.

Before applying for reward credit cards, make sure that you do your homework. Check up on what restrictions and limitations may be involved, and only choose a program that has rewards you will actually use.