While mindless shopping drains your pocket, not utilising the reward points programme of your credit card may be another big mistake that you are committing unknowingly. After all, earning reward points on overseas spend or redeeming points for a free flight is not a bad bargain at all.
Your rewards credit card earns points on every expense charged to it. The points earned can be redeemed for gift vouchers, airmiles or gifts from a rewards catalogue. Here is a list of some pitfalls you will want to avoid with your rewards credit card.
- Never allow the reward points to expire
Since most reward points have an expiry date, you must check your accumulated reward points regularly to ensure that you do not waste your points to get some goodies of your choice. One way of making sure that you know the expiration date is to go through your credit card statement every month or get updates on your online banking account.
- Never miss a payment
You may lose your accumulated reward points due to outstanding payments. If you read your credit card application form thoroughly, you will know about this clause of credit card issuers withholding your accumulated reward points if you miss your payment. Not to mention the interest charges on your carried over balances can eat into any benefit your reward points may offer.
- Read the fine print
Credit card providers keep changing their rewards programme frequently. So, you must ensure that you read everything that comes with your monthly billing statement. The rate of earning, the number of points required to redeem a gift/voucher, the validity of points, or the rate of conversion of reward points into air miles are all subject to change.
- You need not be a spendthrift just to earn points
The lure of earning points should not make you a spendthrift. Remember, you can still earn reward points even if you are a smart and mindful shopper. Hence, prioritise and spend on items that you really need. Some cards do offer you a higher rate of earning on a particular category of expense such as dining or online retail expenses. But this doesn’t necessarily mean you need to alter your spending patterns for a few extra points.
- Understand your reward programme
As a credit cardholder, it is your responsibility to understand your reward programme well, so that you do not lose out on opportunities to earn some great reward points or cash back.
For example, the PETRONAS Maybank Visa card gives you TreatsPoints to redeem free petrol. You can get 5 times TreatsPoints for purchase on weekdays and 8 times TreatsPoints for purchase on Saturdays and Sundays. Ideally, with this card, your fuel expenses should be incurred on the weekends where you can earn points at a higher rate without having to change your spending patterns.
- Ignore the annual fees
Take a close look at the annual fees always. While many cards come with a lifetime annual fee waiver, most cards often carry a fee waiver only for the first year. Sooner or later, the fees and charges involved will catch up. A good rewards card should be able to justify the annual fee charged. This means that the points a card earns should be able to provide benefits that are equivalent to offsetting the annual fee of the card itself.
- Choose the card that is best suitable for you
You must always choose a card according to your lifestyle – your affordability and spending needs. For example, if you are a frequent traveller, your needs will be different from that of a person who is looking to earn points on grocery shopping. There’s no point picking a rewards credit card that offers a high rate of earning on a category that you hardly spend on.
Through this article, we hope that you got a better idea of how to get the most out of every expense charged to your credit card. Keep in mind that reward points can truly be effective when you tend not to carry over too huge a debt into the next month. Always strive to make full and timely payments on your card to avoid letting the fees and charges eat into your hard earned reward points.