How to make the most of your credit card rewards

Some people are reluctant to use credit cards, knowing they have problems resisting the lure of maxing the thing out. This is a very real concern for those who don’t want to wind up deep in debt, paying a high rate of interest.

Countless others, however, have embraced credit cards, using them for all of their spending. By spending aggressively on their cards, consumers can generate rewards which can easily add up to hundreds of dollars per year.

That’s not bad for doing the spending you’d normally do anyway.

Like many other personal finance products and services, credit cards are tools. If you are careful and responsible, you can actually make money off your credit cards.

Choose your credit cards carefully

There are, by my last count, approximately 439,903 different credit cards in Canada.

Okay, that’s not really true. The real number is probably closer to 100. Still, that’s a lot to choose from. It’s enough to make someone throw up their hands and take the path of least resistance – usually choosing the first card their bank suggests.

This is not the way to go about choosing a credit card. Too often, the suggested card doesn’t offer the best rewards program. Instead, be smart about it. Take your time. Do some research. Our credit card comparison tool lets you view the pros and cons of dozens of Canada’s top credit cards. This makes choosing the right card for you easy, depending on what you’re looking for, whether it’s travel or cash back.

Consider paying a fee

If you’re serious about getting the most bang for your credit card buck, take a look at cards that charge an annual fee. You can really supercharge your rewards.

The easy way to do this is to compare two competing cards from the same issuer. The MBNA Rewards MasterCard® and the MBNA Rewards World Elite® MasterCard® are similar in many ways. One of the biggest differences that you are most likely to notice right off, though, is that the  

latter has an $89 per year annual fee after the first year.

But the rewards with the World Elite® MasterCard® are also much sweeter. The World Elite® MasterCard® gives 10,000 bonus miles with your first purchase. The Rewards MasterCard® only gives 5,000 miles. The World Elite® MasterCard® gives two points back for every dollar spent, while the Rewards MasterCard® only gives back one point.

If you spend a lot on your credit card, it might make sense to spring for the card with the fee. When you rack up the rewards enough, it more than makes up for the annual fee, and you could find some really sweet rewards.

Shoot for smaller credit card rewards

Many people dream about taking their family on an exotic vacation financed by credit card points.  

Unless you’re a big spender, though, you’ll have to save those points for a very long time. Often, people get discouraged at the slow growth of their rewards and stop spending on their credit cards altogether, stranding points in an account never to be seen again.

Shooting for smaller rewards can be a great way to really maximize credit card rewards. Scotiabank’s SCENE® Visa card allows cardholders to redeem a few points at a time at Cineplex movie theaters. Heavy spenders end up with free movies in no time.

Hotel credit cards also often give generous rewards for staying in their properties. These can add up quickly, especially for those who regularly travel for business. This is likely a better way to get free hotels rooms than with a general points card.

Stick with one credit card rewards program

My last bit of advice is simple. Sticking with one card really maximizes your ability to earn rewards.

There are other benefits to sticking with one card, too. It simplifies things. You only have one bill to pay off. Having multiple credit cards can potentially hurt your credit. Plus, if your identity ever gets stolen, you have fewer phone calls to make.

Get serious about credit card rewards

Credit card rewards can add up to serious free money, travel, and other perks. As long as you are responsible and only spend on things you would buy anyway (think groceries, gas, utilities, and other bills), you have a good chance of running up the rewards. Make sure to pay off your card balance each month, though. You don’t want to carry a balance and end up paying interest.