November 25, 2011

Playing the Credit Card Rewards Game

As a US-ian, I rarely use cash and even more rarely coins. For several years I exclusively used a debit card, as opposed to a credit card. Not sure about international terminology, but a debit card is linked directly to a checking account, and can only spend money that exists in that account. If you have less money than you're trying to spend on a given purchase, it will be denied (or your bank will cover you and slap on a ridiculous fee). Some might also call it a check card.

Money can't buy the thrill of the steal
Recently, I entered the world of credit cards. I long avoided them due to the stigma they've earned over the past decade and a fear of finding myself in debt. I've always lived within my means, and usually below them, but a family history of fighting credit card debt has left me wary. Couple that with inertia to move on from my debit card, and you end up with several years of debit cards.

Then I started planning a long term trip. I knew I'd fly some long distances, and concluded airfare would be the largest single expense. That's when I started looking into points programs, and it was a quick hop to credit card rewards programs.

Just so we're all on the same page, these rewards program typically give you points for spending money on the associated credit card. The number of points per dollar spent depends on what and where you're buying. These points can then be redeemed for cash (1 point = $0.01) or spent on rewards, such as gift cards and electronics. For some credit cards, though, you're able to transfer those points directly to a frequent flyer airline program and redeem award tickets.

The reason you would opt for the transfer (and not just cash) is that points can end up being worth more than $0.01 upon redemption, particularly if you book international premium tickets. So while not necessary, I would definitely not turn down a first class flight across an ocean.

So how does the game work? I simply make all purchases through a specific credit card and earn points. There are also additional services, such as dining programs, that can earn additional points. Plus, the first time sign up bonuses can easily fund an entire ticket, but these require planning. I'll go into the strategy I've planned to earn my future airfare in a future post. For now, I'll finish with the most important rule of this game:

Pay off your balance every month!


  1. for now i dont want to enter the world for credit card, maybe after 2 to 4 years

  2. Very important to do that, paying the minimum can mean never ever paying off that debt.

    That being said, I wish my card had points and things like that. Maybe I should change that.

  3. lol thats all i use is credit cards


Comments are appreciated. I'll assume everyone here is a human, but if the comment isn't relevant, it's not going to appear.