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Money and Miles: How to Make Your Credit Cards Work For You
Love your credit cards wisely!
I love my credit cards. There, I said it. I know, I know ... I shouldn't love my credit cards. They sometimes cause me to spend more money than I would have if I'd bought items flat out and occasionally my personal finance goals get severely compromised by my credit cards. But, as long as I have everything under control in terms of spending money and then paying off my balances in a timely manner, my credit cards are great. I love them. And one of the main reasons that I love them is that I can get "rewards" from them in the form of money back or miles earned.
Yes, I know, "rewards" on credit cards is a word which goes in quotes when writing about it because you're really spending money and not getting a "reward". But, again, if you spend wisely, choose your rewards wisely and pay off your outstanding balances wisely, you can wisely wind your way to collecting some pretty sweet rewards. No quotes.
Things to know to get the most of money back and miles earned on credit cards:
- Rewards on credit cards are really best for those people who would be using the credit cards anyway. If you don't regularly use credit cards to make purchases, you shouldn't start just because there's incentive to do so. But if you're already using credit cards, you might as well just switch over to the ones that give you money or miles for your spending.
- If you don't travel regularly, miles might not be beneficial to you. Sure, you can get some neat plane tickets, but if you're suddenly taking vacations that you hadn't planned on and you're paying the outside expenses that aren't covered by your miles earned, then you could end up spending more than if you wisely plan your rare vacation. Miles earned on credit cards work best for business travelers who fly regularly.
- Money back is usually only good on cash purchases, so if you're getting a new card in order to transfer a balance or something of that nature, you aren't likely to get money back on it. You might want to go with a card with a good balance transfer rate if this is your situation.
- Maximize your money back by avoiding all interest and fees. Pay your balance off in full every single month. If you've made a large purchase and this isn't possible, pay as much over the minimum balance as you can each month until the balance is paid off. When you weigh what you're getting back in money earned or miles awarded with interest and fees, you'll see that certain rewards cards don't really pay off.
- Shop around. If you don't yet have a money or miles card and are planning to get one, look in to getting the best rates. Make sure that you know if the money back is for all purchases or just certain ones. Make sure that you identify what the terms are of your miles back agreement. If you already have your money or miles card, check the terms and consider transferring to a new card if what you have doesn't seem like it's working for you.
It's okay to love your credit cards. And it's okay to let them love you back with miles to new destinations or money to splurge on yourself now and then. Just remember that if you're going to make the relationship with your credit cards work out right, you have to love them wisely!