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Maximize your credit card rewards

We’ll show you how to discover the popular and little-known benefits, ways to use your rewards like cash back and third-party rental car insurance.

Having a credit card can be dangerous, and some financial advisors steer clients away from them. But if you use your card intentionally and avoid accumulating credit card debt that carries a high interest rate, you can benefit greatly.

With wise credit card use, you can maximize your rewards and experience money-saving perks. We'll show you how to discover the popular and little-known benefits, ways to use your rewards like cash back and third-party rental car insurance, and how to decide if a card is worth an annual fee.

Credit card benefits
Most people have a general comprehension of credit card rewards, and you’re probably familiar with most of the popular rewards programs.

Popular credit card rewards
By far the most popular credit card reward is points. Almost all rewards credit cards have a system where you can earn points for every dollar spent. But various cards have different focuses, so some offer one point per dollar on every purchase, while others offer two or three points for specific purchases.

Cards connected with retailers usually offer extra points for purchases made at their store. Several cards give extra points for dollars spent on fuel and travel. And a few cards change what they give extra points for quarterly.

Depending on the card, you can trade your earned points in for cash back, gift cards, or other perks.

Surprising credit card rewards
The following rewards aren’t universal, so if you want to take advantage of them, you’ll have to check to see if the cards you have offer one or more of these rewards.

Rental car insurance
You might not have realized that some credit cards cover your car insurance when you’re in a rental car. Sometimes this coverage is automatic if you use the card to pay for your rental, and sometimes it’s a separate option that you pay a flat fee for. 

No foreign transaction fee
If you travel internationally, foreign transaction fees for purchases can add up quickly. Some credit cards waive those fees. If you’re a frequent traveler, one of these cards is a must.

Airline rewards
Air travel can be expensive, but there are many ways to save. Airline rewards cards are one such way for travelers to save. Not only can you redeem points for airfare, but other rewards range from discounted companion fares and free checked bags to access to airport lounges.

How to use your credit card rewards
Every card is different and how you redeem your rewards will vary, but the following are general tips to help you use what you’ve earned. 

Special programs
If your card gives extra points for specific purchases in a set time period, you might have to join the challenge. If you log onto your credit card account online, you should be able to find the current promotions, and when you review them, you can add them to your account. That way, if you make a qualifying purchase, you’ll get credit for it.

Travel rewards
As long as you book your flight on the airline associated with your airline credit card, you should get the perks automatically. For example, when you add a checked bag, it will be free automatically if that was one of the rewards specified on your account.

If you have other travel rewards associated with your card, they should apply without you having to do anything besides using your card for the purchase.

Rental car insurance
If you want to tap into this reward, you’ll need to find out if it’s automatically applied when you rent a car using your card or if you have to enroll in the program for an annual fee. Once you know you've signed up, all you’ll need to do is use your card for the rental. 

You should also check if your existing insurance already covers rental cars. You can usually look up whether GEICO covers rental cars or ask your insurance provider, depending on what company you went with.

Cash back
Some cards issue their users a check early in the year that expires at the end of the year. For example, Costco card users will get a check in February to use at Costco stores. If you’d rather have cash back, you have to take the check to a Costco store and turn it in for cash.

Alternatively, you can use the check to make purchases at Costco. If you lose your check, you can ask the card provider to send a new one, or you can access your account online and have a digital check emailed to you. They’re good about making sure you have access to your money, but once the year ends, you’ll have no recourse to access your rewards. 

Most cards offer a cash back option for the points you earn. Before you take the cash back, make sure you look into whether that’s the best option. Some let you use your points to purchase gift cards worth twice as much as the cash back option.

Warning
Some credit card rewards expire at the end of the year or on a revolving basis, and it’s your responsibility to use your rewards before they expire or you’ll lose them.

How to decide if a card is worth the fee
There are rewards credit cards available with no fees. Make sure to evaluate the value of the rewards to decide if the extra benefits are worth the yearly fee.

For example, you might be considering an airline credit card that has a $100 annual fee. You know that you fly four times a year with your family. This card includes free checked bags for up to four passengers. At $35 per checked bag per direction, your family of four would save $280 in baggage fees in just one trip.

As long as you use that airline, your rewards will far outweigh the fees. 

Let’s consider that same card with a different example. If you travel frequently but pack light and rarely check a bag, you might not get enough benefit from the card to make the fee worth it. 

Every card you consider will have perks that may or may not be a good fit for your situation. When you evaluated the rewards, only count things that you already do and know you’ll continue doing. If you have never flown, you shouldn’t get an airline credit card just because you think it might be fun to fly in the future. 

Similarly, you might not want a card associated with an outdoor outfitter's retail store if you’re not into hiking and spending time in nature. 

When you find a card that’s a good fit, you’ll end up reaping the benefits just for making purchases you would have done anyway. So, spend some time comparing rewards and fees so that you can find the perfect card for you.

Content writer - AutoInsureSavings.org | + Posts

Melanie Musson writes and researches for the auto insurance comparison site, AutoInsureSavings.org. She strives to help others understand how insurance can help them achieve financial freedom and stability so they can enjoy the things they love.

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