Within the past few years, the UAE and the world have embraced digital payments and the use of credit cards. Credit cards have surpassed all barriers and made their way to almost wallet. Very often people are confused about how they can make the most out of their credit card. The answer is simple smart spending will allow you to accumulate more and more rewards.
When used wisely as a financial tool credit cards return more than the amount that is initially paid by the cardholder as joining fee or signup fee. Now the question arises how can one indulge in smart expenditure and wise use of credit cards.
If you are one of those cardholders who are looking forward to making the most out of their credit card or maximizing their cashback and rewards then you’ve landed at the right place. In this thread, we will shed light on how one can maximize their cashback along with various tips and tricks that will help you to use your credit card wisely and smartly.
Choosing the Right Card
Maximizing credit card rewards and cashback begins with choosing the right credit card. Every individual has different needs and follows different spending patterns therefore different credit cards turn out to be suitable for different individuals. While choosing the right credit card one should lay emphasis on their spending habits, expenditure pattern, individual needs, and budget.
Keeping these factors into consideration will compliment your spending pattern and thereby the rewards. This strategy turns out to be the best one when an individual is trying to maximize their benefits. For example, if you spend a considerable portion of your earning on online shopping platforms, you should choose a credit card that offers rewards in case of online shopping.
If you own a single credit card then this strategy is quite useful, however, if you have multiple credit cards then you should use each of your cards to make payment for the category they compliment. For example, if you have three credit cards i.e. travel credit card, cashback credit card and a general credit card that offers discounts on online shopping then for booking flight tickets use your travel credit card, use your best cashback credit card to redeem cashbacks and for online shopping use the general credit cards.
Maximize your Credit Card Use
It’s good to own multiple credit cards but there is no point if you use them once in a while. In order to make the most out of your credit and maximize your cashbacks it is recommended that one should use their credit card frequently.
Try to use your credit card instead of the debit card or cash when possible. Cardholders can make use of their credit cards to pay utility bills, online subscriptions, along with online orders to make the best use of the financial tool. There are mainly two benefits of maximizing your credit card use i.e. you can earn more points and cashback. More reward points mean more earnings. Secondly, when you maximize your credit card usage you can earn these rewards and cashbacks quickly.
Making Use of the Interest-free Tenor
Every credit card comes with an interest-free tenor varying from 20 days to 55 days depending on the type of credit card. The longer will be the duration of interest-free period easier it gets for the cardholder to make the payment on time.
To understand the concept of interest-free period and how is it useful in maximizing credit card benefits and cashback let us consider an exemplary situation. Let us assume that the credit card bill is generated on the 15th of every month and the due date for making the payment is the 10th of next month. The cardholder is planning to make a big purchase. Now if the purchase is made on the 17th of this month, the card owner will have a period of 54 days to repay the outstanding amount. However, contrary to the first situation if the purchase is made just a day before the bill is generated one will only have 26 days to repay the outstanding amount.
Being aware of the billing cycle and will and payment dates will allow you to maximize your cashback and credit card benefits exponentially.
It is vital to be aware of the spending patterns in order to maximize your cashback. If an individual tends to spend a lot on movie tickets and fine dining then one should choose the credit card that offers the best rewards/ cashback on movie tickets and dining. If you tend to spend more of travel choose a travel credit card.
Secondly, it is crucial to be aware of the monthly expenditure as some of the credit card providers have a capping where they limit the cashback that can be earned in a month.
It is not recommended that you switch your credit card every now and then when you get to know about an offer. However, it is a good idea to be aware of the credit card promotional offers when signing up for credit cards for the first time. Using this strategy one can maximize their credit card use by simply spending a threshold amount within a particular period.
Existing cardholders should always look for special offers during special holidays and festivals. Several credit card providers run different promotional offers and schemes during festivals and the new year. This will allow the user to maximize their cashback and rewards.
In a Nutshell
Credit card cashback are beneficial only if the cardholder manages to pay the bill every month completely. You might end up earning some rewards or cashback but if you don’t repay your entire bill you will have to pay more in the form of interest which is not a profitable deal.
Secondly, cardholders should not overuse or overspend just for the sake of earning cashback and rewards as it might lead them to get trapped in debt. Ideally, cardholders should check their budget and spending requirements to ensure they aren’t overspending.