This weekend, one of my tasks was to pay my credit cards. I only use rewards credit cards. By now, we all probably know what a rewards credit card is, but the ones I refer to are cards that reward me for spending money.
These kinds of cards come in many different types. Some reward you for spending money anywhere. Some only reward you for shopping at certain stores. More often, cards reward you more for shopping at certain stores and still reward you for spending a little bit less elsewhere.
I currently use two cards: a Chase Amazon.com Rewards Visa and a Chase Disney Rewards Visa.
Why did I choose those two?
Well, I’m sure I’m not getting the best bang for my buck. If you do some quick searching, you will find a number of blog posts about how to “hack” the rewards card system. What that means is enrolling in a number of different cards and putting all of your spending in certain categories on certain cards in order to earn the best rewards.
Ain’t nobody got time for that. And by nobody, I mean me.
I use these two cards because I earn rewards at places I shop regularly. My Amazon.com rewards go towards buying Kindle books and other splurges. My Disney Rewards points go onto a gift card that I can spend when I travel to Disney, meaning that I can use them for souvenirs or dining or whatever I want. Or I can spend them online.
How do I decide what purchase to put on what card? It’s sort of haphazard, I must admit. Since I consider the rewards in both categories to be entertainment, earning rewards in both categories is good. I tend to lean towards the Amazon.com card unless I have a vacation on the horizon and want to stock up some money.
Also, I’m careful to watch if there are bonus rewards.
For example, if I use my Amazon.com card at Amazon.com, I get 3% back in rewards points. That’s an obvious winner. I also get 2% at gas stations, restaurants, and drugstores. I get 1% everywhere else. The Disney card is a flat 1%.
But wait! You have heard that there is a Disney Rewards Visa that has better rewards. You are right, but that card has an annual fee. I refuse to have a card with an annual fee. For some people, these sorts of cards may be worth the perks. They aren’t worth it to me.
Why do rewards cards get a bad name?
Well, for one, the interest rate tends to be higher. I will admit, I have no idea what the interest rate is on either of my cards right now. Why not?
I pay them off every month.
This is crucial if you’re going to be using credit cards for rewards. The rewards are absolutely not worth it if you’re not paying off the card every month. (Personally, I think everyone should work to get to a point where they always pay the card off every month, but I know that’s easier said than done. Just keep working at it – you’ll get there.)
So I’m no expert at rewards credit cards. I’ve found two that work for me. I put as many bills as possible on these cards (basically everything that doesn’t require an added fee – so cable is paid on credit, but water is not, for example). And the rewards slowly add up. I have to pay bills and buy food and gas. Why not get a little something back?
What are your favorite rewards credit cards?