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How to Use Your Rewards Credit Card Wisely?

By  Tarek Ghobar , Co-Founder .

Have you ever seen a bank’s ad telling you that you can gain thousands of redeemable points just by using their credit? Well, it’s not far from the truth because it is possible to use a rewards credit card to gain a significant amount of points to be redeemed at retail outlets or for air miles. However, many cardholders do not use their card strategically and may end up in pitfalls such as paying interest and unexpected fees or just never earning enough points to redeem a reward.

But do not despair--whether it's a shopping spree or a vacation, your dream reward can be within reach through strategic spending and understand the terms and conditions of your program. Here are a few tips that will help you stay on track to getting that reward you’ve been waiting for.

Keep your spending in check

Many credit cards offer attractive rewards, and it is essential to know how much you need to spend to earn a redeemable number of points. Overusing your credit card to secure maximum points could lead you to spend beyond your means, and interest rates are never pretty.

For example, if you hold a Samba AlFursan Credit Card in Saudi Arabia, you can earn 1 AlFursan mile for each 5 SAR spent. Yet the annual interest rate is 36.34% and there is an annual fee of SR 250. You would need 20,000 Al Fursan Miles to get a free roundtrip domestic flight on Saudia Airlines, which is a spend of SAR 100,000! At such an interest rate, having a balance of SAR 25,000 at the end of one month and not paying it in full would cost just over SAR 745 in interest, and by adding the annual fee of SAR 250, this roundtrip flight is already costing almost SAR 1000.

Also, monitor your expenditures to make sure you’re not spending more than you can pay back and go through your statements to check if there are any unnecessary purchases you can cut in the future.

Be familiar with the T&C

When you sign up for a credit card, try to dig into the fine print before committing. Be clear on the annual fees, the frequency of use, earning rate, if your points may devalue, expiry, and any other obstacles you hinder your progress.

Some credit card may be easy to obtain, but there are rules you have to follow to maximize your earnings. For example, Emirates Islamic Bank Skywards Infinite Credit Card offers a 125,000 Skywards welcome bonus when you sign up. However, they must meet the minimum spend of AED 150,000 in the first 6 months to acquire it. That is a lot of money spent!

Learn more about Skywards reward program

Is the reward worth it?

You might sign up for a rewards credit card with a target reward in sight, but it is important to make sure that it is realistic and worth the effort (and money). Credit cards are expensive investments, and unless you are totally in control of the spend and most importantly the payment back, it might not be worth it.

Ultimately, going in the red for air miles defeats the purpose of a rewards card. Try to set a realistic target and make sure you are gaining more than you're giving.

Last Updated  July 28, 2019