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  • 7 Wise Ways to Maximize and Redeem the Credit Card Rewards Points You Earn

    Rewards points have essentially become a new currency. How to make sure you spend it well.
    by Aneth Ng-Lim .
7 Wise Ways to Maximize and Redeem the Credit Card Rewards Points You Earn
PHOTO BY iStock
  • Did you hear the story about a guy who traveled the world and flew first class but paid only US$273? Yes, that’s right, he spent less than P15,000, and when I saw the headline, I hesitated thinking this could just be clickbait.  Then I figured why not — I might pick up travel bargain hunting ideas.

    Brandon’s story was featured in ThePointsGuy.com (TPG), a website that started out as a blog to help readers maximize their credit card points and miles. And while the founder blogger is from New York, and the site is administered out of the U.S., I personally found many strategies here that got me better mileage for my miles.

    From March 8 to 25 this year, Brandon traveled from New York through Frankfurt, Singapore, Auckland, Queenstown, Sydney, Bangkok, Hong Kong, and Tokyo before returning home.  Thanks to the points and miles he earned from his credit card and other travels, he only had to pay for taxes and fees.

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    He flew Singapore Airlines, Thai Airways, and Cathay Pacific — all on first class — and also stayed in leading hotels including Hilton, Holiday Inn, Hyatt, InterContinental and Anda,  which he paid for with points and miles, too. In case you are thinking this is a once in a lifetime for Brandon, and that no one else will be able to do it, it was not actually his first free trip courtesy of points and miles, plus he even traveled with his friend Jimmy, who also primarily paid for the trip with points and miles.

    The two were the first to admit that they had help planning this heist —I mean trip — from a group of travel hackers. Brandon told TPG, “We figured those travel hackers are the only group of people — outside of rich folk — who can afford to do these types of trips.”

    But even if we do not know any travel hackers, Brandon and Jimmy are high flying examples that show us how far we can take the points and miles we earn from our credit cards. All we need is a strategy to get us from point A to point B.

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    Here are seven ways maximize your credit card's reward points you earn

    Strategy #1: Pick your battle.

    I love this quote from Joe Vitale: “A goal should scare you a little, and excite you a lot.” Brandon and Jimmy set such a goal for themselves and was able to tick an exciting item off their bucket list. What do you want for yours? Do you want to take your family on a free trip? Maybe enjoy a staycation in a luxury hotel? Or how about a new iPad?  I would suggest you try and set the bar higher than the typical electric fan or oven toaster.

    Strategy #2: Arm yourself with the right weapon.

    Once you know your goal, check if your credit card can make that happen.  Not all credit cards are created equal so pick the one that will get you faster to point B. If you are angling for a free trip, check how many miles with your frequent flyer program your credit card will award you for every expense.  Once you know, see how other credit cards compare. If you own the most rewarding card, that’s great. If not, time to swap.

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    Strategy #3: Pay attention to bonuses.

    I recently got mail from a bank offering me a sign-up bonus of miles equivalent to a free trip to Japan. I did not want another credit card, but that was really tempting. If you will need to get a new card to reach your set goal, pick one that will award you a generous bonus once approved. Every point or mile counts. If there are no welcome offers, consider waiting as these are extended throughout the year by nearly all credit card issuers.

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    Strategy #4: Loyalty is its own reward.

    When you have picked the plastic currency that will let you reach your goal sooner, use it for all your expenses. If you carry several cards in your wallet and randomly decide what to use, it will take you a long time to get to point B. Of course, there are exceptions to this like when you have maxed your limit (then stop using it to save on fees) or when your other card will entitle you to an exclusive discount or gift with purchase.

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    Strategy #5: Keep doing your homework.

    Credit cards launch various promotions year round, from rewarding bonus points with certain purchases or giving discounts for rewards redemptions.  Make sure you do not miss these offers by signing up for SMS alerts and newsletters via email. You can also check your credit card’s Facebook page or website every week to stay on top of promotional news.

    Just recently, my credit card offered to give me a 20% bonus if I redeem my miles towards their featured frequent flyer partner before the year ends.  Then I learned I also earn bonus points for all dining expenses for the next six months. All these add up, so swipe smart.

    Strategy #6: Watch out for expiry dates.

    Some credit cards allow you to rack up points with no expiry dates so you can take your sweet time to save up for your dream reward. However, others impose a deadline so make sure you read the fine print, so you don’t lose out.  Be careful as well when transferring points to frequent flyer programs, as those may also have ‘use by’ dates. Best to convert when you are almost sure of your travel plans but do not wait until the last minute as conversion takes time, as long as six weeks for some travel programs.

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    Strategy #7: Use your points wisely.

    Rewards points have essentially become a new currency.  Some credit cards have teamed up with stores so you can pay for your purchase using your points. If you don’t have enough, you can charge the rest to your credit card. But not all cash conversions are good deals. In fact, money experts argue that one of the worst ways to redeem points is through cash back or gift cards as they give the lowest value of redemption. They say that points could be worth 5 to 15 times more when used for flights.

    A final word of caution, if it’s too good to be true, it likely is. I noticed that with every swipe, one of my credit cards will send me a text inviting me to pay for that purchase using my points. All I had to do was click on the link.  One time I decided to check it out, and it was so convenient. With just two clicks, I could pay off my bill.  But I became suspicious why my credit card will make it so easy.

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    See, while rewards points are meant to inspire loyalty, it is an expense to credit card companies. They walk a fine line between designing attractive rewards programs to drive loyalty and hoping not everyone will redeem and jack up their cost.

    So back to the SMS offer, I discovered that it will eat up 50% more points than if I redeemed a cashback offer online. So a P100 credit will require 1,000 points online, but if I clicked via SMS, they would deduct 1,500 points.  And nowhere does it say in the SMS or in the webpage where you will confirm the conversion that this is the case.

    The advice of the late Ronald Reagan comes to mind: trust but verify.

    Aneth Ng-Lim began her career as a writer and happily returns to her journalism roots after working as a communications specialist in the government and the private sectors. While working for a bank as a consumer education head, she honed personal finance skills and increased her money smarts. A woman empowerment champion, she is a proud mom to two teenage daughters.

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