How to Maximize Credit Card Points without Affecting your Credit Score?

How to Maximize Credit Card Points without Affecting your Credit Score?

There are several different credit cards out there, and there is a seemingly endless variety of payment options for customers. Banks are aware of this, and so many banks are giving incentives for using their credit cards. Banks and other financial institutions want to be at the top of your wallet with their card, and they have rewards for keeping it there.

The world of the rewards of credit cards

There are three key types of credit card rewards that you can take advantage of while making transactions using a card.

Rewards for getting the card — credit card rewards in this category are items like a free checked bag for getting an airline co-branded credit card, or a free hotel night each year on your cardmember anniversary.

Signup bonus — Several cards provide an initial welcome offer for a new card to open and be accepted. After spending $3,000 in the first 90 days of getting the card, you could get 60,000 airline miles.

Rewards for ongoing transactions — In addition, for each of your transactions you can receive rewards. For all transactions, some cards offer a particular amount, while others give higher incentives for buying in some categories.

If you do the math, you can see that the return on subscription incentives is far higher than the return on regular spending. Instead of having just one or two points per dollar spent, by meeting the requirements for a signup bonus, you might get anything from 15 to 50 points per dollar. One technique I have used to optimize the benefits of credit cards is to frequently sign up for new credit cards.

Credit card rewards

Doesn’t your credit score hurt?

Whenever someone tells about credit card rewards and how they have used them over the past few years, by far, the number 1 question you get is “doesn’t that harm your credit?”

It’s a great question and shows that someone who is conscious of how important a good credit score is to your overall financial health is the person asking it. To get an indication of how likely you are to repay your debts, your credit score is a number that banks and other financial institutions use.

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While not a perfect predictor, it is commonly used in many sectors of finance. Five different components mainly make up your credit score. In fact, having many distinct credit cards will help with one of the largest components, the percentage of utilization. As a realistic example, for over five years, you have applied for multiple new credit cards per year and continue to maintain credit scores in the high 700s.

Find a method that works for you, be coordinated

The more credit cards you have and the more different kinds of incentives you accrue, the more difficult it becomes, of course. Paying bills and keeping track of spending is very easy when you have only one credit card. But it takes some organization to keep things straight as you add more and more credit cards.

You want to make sure, above all else, that you have a system set up to pay your bill in full, every month. One optimal way to manage your bills and expenditures, of course, you can directly do that via a finance app using your mobile phones. For different people, different things will work; find the system that works best for you.

Take it easy

If certain individuals first learn about credit card rewards, they go all out and in a short amount of time just start applying for hundreds of credit cards. While this may be one tactic for rapidly racking up a lot of credit card rewards, for two reasons, it is not recommended. One is that applying for a lot of new cards rapidly raises the chances of making one or more mistakes. Another explanation is that, within a short period of time, many banks and credit card issuers have a dim view of individuals who apply for many credit cards. Even with a high credit score and solid salary, if you have recently applied for a lot of credit cards, you may be refused cards.

To take it easy and spread out your credit card applications is a tactic that is likely to be more effective. A fair rule of thumb is to have one every three to four months. If you have a partner that also has good credit, new applications will be multiplied. But it’s best to come up with a strategy first instead of just applying for any new cards that look good. Choose a ride you would like to take on points for free. Then select the cards that offer incentives that will assist you in making that trip happen.

Final Thoughts

Credit card rewards can be a perfect way to add extra value, but only if you use them wisely. You can choose to optimize either airline miles, hotel points, or cashback. For travel or as statement credits, credit card rewards may be used. Be sure to keep organized, take it slow in applying for new cards, and always remember to pay your credit card bill in full each and every month in order to maximize your credit card rewards.