Before we look at the ways in which you can redeem your reward points from credit cards into wealth, let’s try and understand how the reward points work.
For every transaction you make with your credit/debit card, the card issuing company gets an interchange fee from the outlet or store you swiped your card at. This also happens when you make online purchases and book tickets. This is how all credit card companies make money. Apart from this, the credit card issuer also charges annual maintenance fees from card holders, which is later converted into reward points for the holders. This is why the credit card companies encourage you to continue using your credit/debit card.
So how do you make the most of these rewards? It’s clear that you have find ways to redeem your points and generate wealth. Here’s how you can do this:
- Indulge in entertainment: You can use your reward points to book Broadway tickets or movie tickets through online ticketing portals such as Fandango. Reward points can be availed for travel plans too. You can create a travel itinerary and fly overseas for a vacation with the reward points you earn with your card.
- Consider paying off other debts: Many people find it less stressful to take a loan on a credit card instead of from a bank. Some credit cards provide an excellent rate of interests that can help you pay off your other debts and mortgages. You can convert your credit card bill into monthly EMIs and get smaller amounts debited from your account.
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- Use your card for shopping online: Opt for online shopping instead of offline shopping. Several websites allow their customers to make purchases using only their credit card reward points. You can buy groceries, electronics, appliances, apparels, and anything that you want on these retail websites. Therefore, now redeeming rewards is even easier than before.
- Get maximum benefits out of the rewards: It can be quite surprising to know the number of things you can do with your credit card reward points. One of the best things is paying off your bills with your credit card reward points. Got a phone or an electricity bill at hand and no cash? Countless credit card holders pay off their small bills with reward points. If you do not have enough of balance in your card, you can pay off the rest of the bill with cash. It is nice to get a little help from your little-earned rewards.
- Invest your cash backs: Credit card rewards and points have expiry dates, so you have to utilize them before the due date. The cash backs and rewards that you earn can be invested in retirement accounts such as Roth IRAs that will give you big returns on your investment. But these are not quick-returns. Consider this as a retirement investment that grows on compound interest and forget about it for at least a decade.
By following these tips, you can use your credit card rewards efficiently and gain a lot.
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