Credit Card Expert

Smart Spending with Rewards Credit Cards

Do you pay off your balance in full every month when it is due? If so, you could be one of the best candidates for maximizing your earnings with your rewards credit card. Practice responsible financial behavior, and your own rewards credit card could become your new best friend.

In my own experiences, I find my rewards credit card to be especially useful in paying for larger bills such as car insurance, auto services, cell phone bills and other utilities. I like to pay for these things with my rewards card because – hey, if I have to pay for them anyway, I might as well earn back some of what I am spending!

Just for the record, I am one of those consumers who never carries a balance. I pay everything off in full, on time, if not early. But I’m not always that responsible when it comes to spending with my own rewards credit card. Sometimes it is just too tempting, knowing that, most of the time, five percent of what I spend will return to me as a cash rebate.

For example, the Citi® Dividend Platinum Select credit card offers five percent back on all gas station, grocery store and drugstore purchases. For all other purchases, the card credits cardholders one percent. Knowing this, I tend to shop a little more freely when I stop into the supermarket or a pharmacy, picking up candy and treats that I really don’t need.

In all honesty, those nice kickbacks are great for offsetting a bit of the overall cost of our total purchases. It makes us feel great to receive those reward checks or prizes once we amass enough points. However, reward programs are also capable of encouraging us to spend more than we must. This is why we as consumers must practice smarter spending.

Put the following tips into practice and you’ll notice that you still feel great about your credit card rewards, but you also won’t find yourself digging through the sofa cushions to find the money you need to pay off your balance.

1.    Plan your shopping agenda to coincide with sales, rebates, coupons and other special discounts. While you do make more in rewards when your bill is higher, you’ll feel better about getting a bargain than you will when you receive a three - or more – page billing statement.

2.    Designate one month to purchase only those things that you absolutely need. Groceries, gasoline, medical appointments and prescriptions – OK. Mocha lattes, manicures, the top 10 newly released DVDs and other frivolous purchases – forget about it. Take just one month to find out exactly what your monthly expenses tend to be on average. Pay for your necessities – monthly bills – car payment, mortgage/rent, utilities, medical expenses, fuel, food and so forth, but lay off the luxuries. Compare to your typical bills and realize just how much money you could be saving yourself if every month worked out this way.

3.    Do not shop when you are hungry or bored. If you’ve ever been in the grocery store or at a restaurant when you were completely famished, you’ll know why. Oftentimes our eyes become bigger than our stomachs when we haven’t eaten in a while. The same can occur when we find ourselves in a shopping environment without any particular needs. Spend when you need to spend, but realize, your rewards card will still work next time you go to buy something, even if it doesn’t get a workout this week.

4.    Balance your checkbook as you spend. Even though you are putting purchases on your charge card, record them in your checkbook register. This will help you to avoid overspending before the bill comes due.

5.    Set a budget for yourself. Figure out your monthly expenses. Add in a little bit for personal spending. Throw in another $50 or $100 for emergency money. Put your budget down on paper and commit to it. Keep a running total of your purchases so you can track your spending and stick as close to your budget as possible.

The trick to a healthy financial situation when enrolled in a rewards program is to let your credit card rewards be the icing on the cake. Save money when you can. Use coupons, fill out rebates and shop during the sales. Spend only what is necessary for your typical lifestyle and general happiness. Earn rewards on all your big purchases and monthly bills.

DO NOT spend just because you are getting points back. Let your rebates be the savings for a rainy day. Practice disciplined financial behavior so you can set aside money for even bigger savings. Pay off your balance each month in full and on time so you can avoid unnecessary interest.

Most of all – set goals for yourself. Decide that you want that Walt Disney World vacation or that flight to the Bahamas. Don’t rush it, but remain persistent. Strive toward your goal using the tips outlined above, and remember, always familiarize yourself with the fine print of your agreement.

For more information and guides on personal finance visit thisismoney.co.uk by clicking here .

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