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How to Choose a Credit Card That Rewards You for Your Lifestyle Spending

Do you own a credit card that rewards you for spending your money? If not, it may be time to evaluate the credit cards that you own.

Using a credit card to pay for bills or lifestyle expenses monthly is not necessarily a bad thing. Now, that doesn’t mean you should go on a spending spree to get rewards; spend within your means so that you’re still able to pay off your credit cards each month and not carry a balance.

With that being said, if you’re going to spend money on common, continuous living expenses, such as groceries and gas, you may be able to receive some rewards for your spending.

Two common mistakes consumers make include not considering what expenses they spend the most money on each month to use that to their benefit and not considering whether their credit cards carry any fees.

When shopping for a credit card, take these steps first before you apply for one:

1. Review your annual budget and see which lifestyle expense category is the greatest.

This could be travel, groceries, gas, etc.

For example, if travel is your biggest variable expense in your budget but you aren’t loyal to any airlines, consider getting a general travel rewards card that pays you back 1.5% or more on each expense. Put all of your monthly expenses on this card to earn cash back or redeem for extra travel.

If you spend an average $30,000 per year on expenses, for example, and you use your travel rewards card to pay for all those expenses, you can get cash back of about $450 per year if the card pays you at least 1.5% on your expenses. That is at least one free airline ticket per year that you earn just for spending money on your usual expenses.

2. Based on that, shop for a card that rewards you the most for that expense category.

In one instance, I asked a new client why she owns an American Express Delta Skymiles credit card. Their response was that they travel a lot. However, they do not exclusively fly on Delta airlines.

If you are not loyal to one airline, consider a travel rewards card in which you can redeem rewards for any travel expense not just airline tickets. This may include metro fees, parking fees, accommodations, taxi rides, and any other mode of transportation. Most travel rewards cards will even award you additional bonus points that can be redeemed after you spend a certain amount within the first few months.

3.       Read the fine print on how you can redeem your awards.

Preferably, look for cards that allow you to redeem your rewards as cash. You can redeem the cash as a statement credit or a check in the mail.

Instead of travel, perhaps shopping online through Amazon is a common expense. Consider their 5% cash back store card or apply for their Visa card and receive 1% to 2% cash back on other purchases outside of Amazon. Looking at it another way, you’re getting a 5% discount on all Amazon Prime orders.

Keep in mind, the principles of being a responsible credit card owner still apply:

  • Spend within your means.

  • Pay off credit cards each month in full.

  • Don’t carry a credit card balance.

  • Pay your bill on time.

With a little research, you can exercise these principles all while using a card that pays you back based on your lifestyle spending.

I'm Helen

Having worked in finance for over a decade, I know what matters most to clients. Here, I share with you what you really need to do to stay on top of your money and retire rich.
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