money

Milk your credit-card rewards for all they're worth

Nov. 14, 2013 at 7:50 AM ET

Video: Lauren Lyons Cole, personal finance contributor for the street.com, discusses which in-store credit cards are worth using this holiday shopping season.

The following tips can help you score some real, tangible stuff in return for using your plastic:

1. Get the most from your credit-card rewards programs:

  • If you pay your credit cards in full each month, you can actually make money by using credit cards that offer rewards.
  • There are cash-back cards, travel cards and points cards.
  • Some cards offer extra rewards for grocery spending, gas, restaurants and travel. Some offer huge intro bonuses for signing up. Find the card that's right for you. (Compare deals on NerdWallet.com.)
  • Focus on one card so you can build up the most points. 
  • While travel cards can seem exciting, most people don't travel enough to make them worth it. Cash-back rewards cards are the best bet for the majority of people. 
  • Most importantly — remember to use it. And remember to cash in on the rewards!

2. Use 'em, don't lose 'em (Or: 7 ways to risk your rewards points):

  • 33 percent of rewards points go unused — about $16 billion worth!
  • In addition to simply forgetting to cash them in, you can also lose them if you aren't careful. 
  • Never miss a payment — missing a payment can hurt your credit score, but it can also cause you to forfeit rewards points.
  • Don't close the card — even if you don't use it anymore, keep it open. Again, it's good for your credit score and good for keeping your points until you're ready to use them. 
  • Credit-card companies have the right to change rewards points programs at any time. So don't save your points indefinitely, because they could be worth less in the future. Use them now. (Hello, holiday shopping!)
  • Use an app like Check to keep track of your points as well as when your payments are due.

3. What to do if you're carrying a balance on one or more cards at the moment (Or: Seductive credit-card offers, sneaky debt):

  • Opening up new credit cards, no matter how good the rewards, is not a good bet for someone who is already carrying a balance.
  • 0 percent balance-transfer cards are tempting, but they often charge fees for the transfer, and the 0 percent rate may not apply to new purchases. Miss one payment and your rate could shoot up to 30 percent. 
  • You're better off focusing on paying down your debt first, then rewarding yourself with a rewards card after the fact. 
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