Avoid debt when you spend on your rewards credit card and reap the rewards

18 February 2014 - Which Way To Pay

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How do reward credit cards work?

The idea behind reward credit cards is very simple; if you spend on your rewards credit card you earn reward in the form of points or cash. Spend correctly and you could earn yourself $100s or even $1000s a year in the form of points, goodies or even cash. Watch out though as there are few pitfalls you need to be aware of.

Things watch out for when you make a purchase on a rewards credit card

Always remember that the reason card issuers give rewards is to encourage spending, spending at a very high interest rate! Always follow this important rule when you make purchases on reward credit cards, repay the card in full each month and then you will not have to pay interest on what you have borrowed. If you fail to make the repayments in full, your rewards will be worthless when you take into account the money you are paying on interest. If you do not think you will make the repayments in full each month, it is advisable to opt for a different credit card with lower interest rates.

Never overspend on your reward credit card

Never over spend when you have a reward credit card, just use the card for all your normal, everyday spending. Replace your entire cash, cheques, charge and debit card purchases with your reward card so that you earn the maximum rewards possible on all your normal purchases. Then follow the golden rule and just remember to pay the card off in full at the end of the month. This is a bit cheeky but if you have work expenses that you need claim back, this can be a great way to earn extra points provided you are able to make the full repayment before you have put your expenses in!

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