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Having a rewards card comes with the benefits of being rewarded as you spend. These points can come in handy later on when you looking to save on flights, accommodation, or even dining out. There are also mistakes that need to be avoided to escape falling into a debt trap. Here are five mistakes to avoid when taking out a reward card.
Stepping out of your budget to earn points
Reward credit cards can be a great tool when it comes to being rewarded simply for using. Depending on the type of card that you have you can earn sign up bonuses that can go up to 100,000 points. Being able to get a free flight to your next holiday destination can be tempting, but if you find yourself spending more just to access points that get you there, you can end up being trouble financially. Always check the spending requirement of the card to access the points to see if it is suitable for you.
Not knowing where to spend to gain
Being able to gain reward points quickly is any card holder’s desire, but if you do not know where to target your spending you could be blowing your budget for minimum returns. Check your reward card to see which hotels, shops, or flights they are partnered up with and what products they have targeted to gain rewards without breaking the bank to do so.
Failing to pay the balance on your card
It is important to find a card that matches the way you spend. Your credit card still needs to be paid off monthly and carrying over a balance can have an effect on how much you end up paying in interest. Your provider can possibly charge an excessive fee which can also add to the interest that you are owing.
Not being aware of the expiration date
Unfortunately, there are quite a few reward credit cards that have points that expire after a period of time. This can be heartbreaking if you were aiming to use your points to help you save on a holiday trip that you have been planning to take. Checking the fine print on the card or speaking to your provider can help you plan in advance. Alternatively, you could find a card where the points do not expire.
Using up your rewards before they accumulate
You may have points stored up that may not get you access to some of the big-ticket items, but one of the mistakes to avoid when building your points is to spend it at a reward store. Reward stores do have some tempting items that you can splurge on like a bottle of wine or a mug, but when you weigh it against some of the potential benefits you will be able to access if you had more points like a free flight to another country it will be worth the wait.
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
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