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They sound like amazing opportunities at face value. Spend money you’d spend anyway and get all sorts of perks like cash back, luxury products or free travel in return. And, truth be told, these can be splendid prospects — if you know the hustle and work it to your advantage. If you don’t though — and you let the hustle work, you — those wonderful deals can become a lifetime of never-ending debt.
Here’s your best shot at winning the credit card rewards game:
Start with Strong Credit
The better your credit score, the more attractive the offers will be. In an interview with CreditCards.com, Gail Cunningham, vice president for public relations at the National Foundation for Credit Counseling said, “It’s likely you’re not going to get a rewards card unless you have the best of credit.”
With that in mind, be careful about applying because every application you submit lowers your credit score a notch. Thus, it’s best to start with strong credit so your approvals will be more or less guaranteed.
You Must Be Debt Free
Another precondition for playing this game successfully is being debt free. If you’re already paying interest on credit card debt and you’re not in the habit of paying your balances in full each month, the rewards you amass will be overshadowed by the interest payments you’ll make.
If you’ve already found yourself in a situation in which your debt is threatening to get out of hand, rather than chasing rewards cards, get in touch with a company like Freedom Debt Relief to help you get your finances back on track. Adding more cards in the hopes of transferring balances, paying them off and getting rewards for doing so is a losing bet in most cases.
Know Your Spending Habits
The key to winning at this game is to charge as many of your monthly expenditures as possible and pay them off before interest is applied to the purchase amounts. You should also be careful to choose rewards you’ll use. If you love to travel, then that might be the best route for you.
If you hate travel, but love money, go for cash back offers. Either way, you must make sure your spending habits coincide with the requirements the card issuers set forth to claim the rewards. If the card has an annual fee attached, will you spend enough to overcome it? If a signing bonus is offered, how much do you have spend to claim it? Will your current spending habits get you there?
Sift Through the Fine Print
Bear in mind, while it looks like credit card companies are doing you a favor with rewards deals, their sole aim is to increase revenues. They’re betting you won’t pay your balances in full and they can harvest interest payments from your habits.
Toward that end, they put insurance policies in their card agreements’ fine print. These can include requirements to hit a certain spending goal within a certain period of time, blackout dates on travel based on rewards points and exclusions for certain spending categories.
You must also pay close attention to the annual fees most of these cards carry to ensure the reward you earn is of enough value to offset the annual fee you’ll pay to have the card. Winning the credit card rewards game — like any other — requires you to first learn the rules so you can work the system to your benefit. These tips will help you accomplish just that.