7 Things You Need To Know About Credit Card Rewards

5. Know your spending patterns

Some cards offer better rewards for purchases of gasoline or groceries. Cardholders with long daily commutes or big families would score nicely with these cards. Likewise, someone who travels regularly for business might appreciate a rewards card that focuses on hotel stays and airline miles. Know how you spend your money in order to pick the card that works best for you.

6. Compare the costs of your redemption choices

Card issuers don’t always make it easy to figure out what’s the best deal when you are ready to redeem your rewards for miles, merchandise, gift cards, or cash back.

In general, I have found that merchandise tends to be the worst deal. Depending on the card, targeted redemptions often offer the best deal—like airline miles from an airline-branded card. Gift card purchases are usually the next-best deal followed by statement credits and cash back.

7. Use all credit, including rewards cards, wisely

If you are planning to apply for a mortgage or car loan in the next few months, you might want to wait to open a new rewards credit card account because doing so can temporarily ding your credit.

On the flip side, if you find a rewards card you love so much that you’re charging it up to your credit limit each month, consider opening a second, different rewards card and splitting your spending between the two accounts. By doing so, you will utilize your available credit in a more balanced way—a factor that can positively affect your credit score.