Here's how you can make the most of your credit card reward points

Did you know that your credit card can also save you money? While we all love spending and doing so on a credit card, it can also help us save money in the form of the rewards earned.

Credit card rewards are one of the biggest attractions why most people decide to own one. A ‘cash-free’ payment mode, credit cards let us dine, shop, travel, pay our bills and buy the things we love the most while earning cashback offers or reward points, if only we understand how to use our credit card smartly.

However, while this looks very attractive, one has to practice caution as to not overspend and maintain financial discipline.

Here’s how you can use the credit card to best of your advantage by making cash-back-offering-credit-cards a money-saving tool:

Explore and pick a credit card that suits your spending attitude. In order to maximise your gains, look for a credit card that offers you reward points or cash back on regular activities like goodies, gift vouchers, freebies, dining benefits, travel fare, hotel stay and more. You can use your reward points for charity too.

If bill payments take away a major chunk of your earnings, choose a credit card that gives you maximum offer on bill payments. If you are a frequent flier, pick a card that gives you air miles that you can utilise in booking another flight, a hotel or for holidays. A co-branded card for such activities will help you fetch sufficient reward points.

Understand and read all the terms and conditions including the rewards program cash back, reward points, air miles policies, and other offerings. It is always better to clear out your doubts before you start using your card. You can use your credit card in a way that allows you to accumulate sufficient points, by doing some advanced planning.

You can use your credit card to pay your bills and insurance premiums. This gives you the advantage of ‘earning while spending.’ While allowing you to pay your bills conveniently, it also entitles you to either earn reward points or get cash back.

Many banks give 5-25 percent cash back on specific spending like restaurant bills, utility bills, movie ticket purchases, etc. The exact categories and cash back percentages are specified in the terms and conditions of the credit card user agreement.

Most cards have a maximum cap on the cash back earned in one billing cycle or for a said period of time. Know the sub-limits for maximum utilisation of your card.

Your credit card statement will show a debit transaction for the amount spends followed by the cash back or ‘cash back earned’ credited in your account in such transactions. After earning a significant amount of cash back, you can also ask your bank to adjust the same with your outstanding balance.

Many banks have tied up with specific brands or ecommerce platforms and offer reward points or cash back during sales for a limited period of time. These deals are mostly notified by SMSes and emails. You can keep a track of such deals and spend accordingly.

It becomes very important to pay the credit card bills on time. Failing this, any amount you save/earn on the card will be offset by the high-interest rate that will be charged on the balance you are carrying. Make sure you have enough balance in your account to pay your credit card bill. This ensures you never skip or delay payment.

Paying on time saves you from getting yourself involved in interest and late payment fees and builds your CIBIL score, helping you get additional credit cards or a loan in the future.

See if your reward points have an expiry date or if your credit provider is levying any charges for reward points redemption.

The idea of earning rewards on spending is very fetching, but avoid getting carried away and spend recklessly which may lead you to a pile of debt at the end of each month.

Rolling over outstanding credit to the next month, making late payments with the possibility of default and paying huge amount of money as interest on your card balance, are the key perils of overspending, which in turn adversely affect the rewards you may qualify for by using your card.