Business & Finance Credit

Reward Credit Cards for a Frugal Time

You have no idea how excited I am. I'm going to be taking a Caribbean cruise but that's not the exciting part. We're staying in a suite. My wife and I are going to wake up in the morning and step out on to our private balcony to see the ocean. We aren't amongst the wealthiest people in the world and I'm quite the penny pincher so how are we affording a suite made for the wealthy and why am I agreeing to pay for it? Our rewards credit card is making it all possible.

I'm amazed at how many people not only don't take advantage of a rewards credit card but may not even know what one is. The idea behind these cards is simple. You receive a certain amount of points for every dollar you spend. Once you accumulate enough points, you are eligible to purchase merchandise with your points.

Some rewards cards are specifically geared for a certain type of reward. Some will earn you airline miles, rebates towards the purchase of a new car, or discounts on gas. Others are more general where your points will buy you anything in the company's catalog.

Keep in mind that one point is not worth one dollar of buying power. A $50 gift card isn't going to cost you 50 rewards points. A $50 gift card in one of my rewards catalogs would cost me 5,000 points!

Not a very good deal, right? Well, not really but it's a great deal if you think about it a little differently. You would use your credit card with or without the rewards points, right? Any points you earn for living your normal life is a very good deal.

Like all credit cards, you have to shop around. Some have annual fees while others don't. Some pay you double points for certain purchases while others pay you a set amount of points for everything. The rules and regulations for your points are different with the different cards. Don't dismiss the cards with annual fees. As with most things, you get what you pay for,

Here's the last bit of bad news. Although rewards credit cards are a great way to save money, if you don't pay your credit card bill in full each month, the interest you're paying is cancelling the potential financial benefits you would gain. It still pays to have a rewards credit card if you're paying interest, but your rewards are simply paying a small portion of your interest.

How many rewards points did it take to pay 60% of my luxury cruise? Here are a few hints: It took a few years to accumulate the points and if I had that amount of rewards points in actual dollars, I could probably consider myself wealthy but if you employ a few key strategies, it doesn't take as long as you would think. I'll tell you about them in another article.

You may have already been on a cruise but this is my first so my friends are probably tired of hearing me talk about it. Nothing tastes better than a free dinner, though, and the fact that this vacation is costing me very little is a penny pincher's dream come true. If anybody tells you that a rewards credit card isn't worth the time or the annual fee, send them to me. I'll tell them how blue the water was.

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