How to Make the Most of Your Credit Card Rewards

When you're choosing a rewards card, another thing to note is which type of benefit has the most cash value. For example, credit card companies are often more generous with travel points than shopping points. My credit card company charges 55,000 points for an airline ticket to Hong Kong, which has a cash value of $5,000. It would charge a lot more -- 56,132 points-- for a ten-megapixel digital camera, even though it's only worth $280!

The main disadvantage of Pleasure Points is that you are at the mercy of the credit card company. They can change the number of points it takes to go shopping or go somewhere and tell you to go to hell if you complain. The website CardRatings.com says many rewards points are worth less than a penny! In a worst-case scenario, the card company can cancel the program altogether when times get tight.

Although I've noticed many rewards cards no longer charge an annual fee, some still do. When they do, then you have to make sure you spend enough money to earn enough points to make that annual fee worthwhile. My husband and I racked up so many points that we were able to fly to Australia, but if you just want to go to Toledo, then the $250 in annual fees we paid wouldn't be worth it. Paying cash for the ticket is probably cheaper.

Lastly, you have to be organized to use Pleasure Points. According to a Harris Interactive poll, 41 percent of people rarely or never cash in their credit card rewards. If you're a list monster like me, you'll be fine. I booked those Australia tickets nine months in advance. And I write little notes to remind myself to cash in the shopping points I earn on another credit card. If I forget, they'll expire.

If you're not detail-oriented, and you know this about yourself, don't go with a credit card that rewards you in pleasure points. For you, cash back is better and we'll talk about that next week.

Resources for Choosing a Rewards Card

There are several great websites that compare and contrast different credit card reward programs. You actually enter your spending patterns and levels and the websites spit out recommendations for you. Here are the best sites:

www.BillShrink.com

www.CreditCards.com

www.LowCards.com

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