Are you a Credit Card rewards noob or a pro? Let’s find out!
After swiping your Credit Card to make some of your dreams come true, the feeling of getting rewarded is like getting another scoop of your favourite ice cream . Since we all love rewards, we often keep hunting for them in every way possible. Be it while purchasing that brand new TV, while choosing a Credit Card, or while ordering food from your favourite bakery (you always expect a free brownie or their famous cupcake as a loyalty reward, don’t you?
Additional Reading: 10 Myths About Credit Score And Credit Report
With people going cashless everywhere, the demand for Credit Cards is only rising by the day. They surely simplify our life in multiple ways. Here are some:
In case of a financial emergency, you don’t need to rely on other people/methods. With your plastic soulmate by your side, there’s nothing more you need to get over this tough phase. Some comfort food maybe, but that’s it. Instead of borrowing money from people and feeling embarrassed about it all the time, it’s better to rely on your Credit Card.
Ciao, wads of cash!
With a Credit Card in your pocket, you no longer need to worry about carrying bundles of cash everywhere. Most shops, grocery stores and your favourite brands accept your plastic mate worldwide. Instead of stepping out with a bulky wallet every time, you can just carry your plastic buddy. It significantly reduces the chances of losing money (as an added bonus).
Additional Reading: Are You Prepared For a Financial Emergency?
It helps build a positive credit
Another advantage of getting a Credit Card and paying the bills on time is that you get to build a positive credit. How does that help? A good credit history makes it easier for you to apply for loans in future. Since it reflects your ability to pay back on time, banks see you as a safe and reliable option.
Apart from getting to avail low introductory interest rates, most Credit Card companies also let you transfer your balances to low-rate cards. Balance surfing proves to be a good decision when you want to close unnecessary high-interest cards and move to the more economical options.
And yes – REWARDS!
The most enjoyable part about owning a Credit Card is getting to avail all those rewards and benefits. Even if you’re one of those few who don’t like to show how much they love rewards, you know you secretly love it, don’t you? There’s nothing bad with wanting more reward points. You get to avail a variety of rewards like frequent flier miles, extra discounts on electronics etc.
Now that you know a fair bit about Credit Cards, let’s bunk a few myths about the much-revered rewards, shall we?
One can still make the most of rewards while ignoring the balance
Wrong! If you think that you can earn rewards while carrying a Credit Card balance, it’s time to get a fact check. Rewards might be the most fascinating part of getting a Credit Card. Well, maybe, second most fascinating. The first being the feeling of finally getting to buy your favourite things.
Paying only the minimum amount every month isn’t good enough. You need to keep up and ensure that your entire bill is paid on time. We know you get to earn rewards by making a minimum payment on your Credit Card. What you don’t know is that you’re actually paying more interest than what you’re earning as reward points. That doesn’t sound too nice, does it?
Those points and miles don’t make any difference
Whoa! Think again. All those frequent flier miles and other benefits that you earn as rewards upon using your Credit Cards and paying the bills on time definitely make a difference. You must have heard the saying—‘drop by drop, you break the rock.’ The exact same logic applies here.
All those miles might look too tiny to be rewarding, but if you keep making all your bill payments on time, they could pile on into a better number. Try it out for yourself. You will thank us later!
Getting a Credit Card just to avail those sign-up bonuses is a great idea
Well, you definitely can apply for a Credit Card and expect to get some attractive sign-up bonuses. But getting a plastic buddy just because you want to avail these introductory offers doesn’t make sense. No matter how tempting those offers look like, you need to evaluate the bigger picture and see if this card will make sense in the longer run.
Once you’re absolutely sure that getting this Credit Card now won’t make you regret later, go ahead and get it. Many of us get Credit Cards, exploit all the introductory offers and stop using them. To be more technical, this is called Credit Card churning.
Although it sounds pretty attractive, it’s not a great idea! It can hurt your Credit Score in the long run. So better be careful now than regretting later, right?
Redeeming Credit Card rewards is easy
Redeeming all your Credit Card rewards might not be as easy as the Credit Card salesman made it sound that day. Especially when it comes to redeeming all those flier miles, you really need to be flexible about your travel timings and dates. Sometimes, it could also mean multiple layovers and ‘not-so-great’ flight timings. But if you really want to redeem all those points, you’ll have to compromise a bit!
Encashing those reward points can hurt my Credit Score
This is one of the biggest myths about Credit Card reward points. There sure are a couple of things that can hurt your Credit Score, like a bad payment history, huge debts, multiple enquiries in a short span of time, a bad credit utilisation ratio. But encashing those reward points is definitely not a part of this list. Just keep making all those Credit Card payments on time and you’re all set.
Credit Card rewards can easily sponsor my travel plan
If you have enough airline miles, that might help sponsor your flight tickets. But that’s not what travel is all about, right? There are a couple of other (significant) expenses involved. Your accommodation, fuel surcharges etc. are not a part of those rewards. These rewards definitely make your travel cheaper, but not completely free.
Now that all your myths related to Credit Card rewards have been busted, you just need to think about one thing—making the most of your Credit Card rewards.
Need more help selecting the best plastic mate? We’ve got you covered!