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REWARDS CREDIT CARDS EXPLAINED 🤑 💳 🤑 Here's what you need to know about rewards credit cards; how they work, what to look out for & why you might consider getting one THREAD BELOW 🧵On twitter.com
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How do rewards credit card work? They work exactly like a normal credit card, you spend money on it & then you pay it back What makes them different is that you get some points or a percentage of cashback based on how much you spend on the cardPermalink On twitter.com
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Usually, it's 1 point per £1 spent or a percentage of cashback The exact offering will vary from card to card Some cards give you additional points for certain types of purchases Example 👇 The American Express Preferred Rewards Gold card offers x2 points on airline purchasesPermalink On twitter.com
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Sometimes reward credit cards can come with other perks such as: • Access to airport lounges • Concierge services • Travel insurance • Hotel/Lodging benefits • Purchase and refund protection • Statement credits from certain merchants • And a lot morePermalink On twitter.com
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What can you do with these points? • Convert them into air miles/hotel points for either flights or hotel bookings • Exchange them for gift cards & vouchers • Swap them for statement credit on certain purchases (The first option is usually the best value for points)Permalink On twitter.com
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You might want to keep things simple and get a cashback rewards credit card to earn some cashback on your spending 💷 The cashback will be a percentage of what you spend on the card, and will usually be deducted from your card balance either monthly or annuallyPermalink On twitter.com
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Rewards credit cards often offer a signup bonus 🤑 You get some extra points or some extra cashback if you spend a certain amount within the first few months of getting the card If you use a referral link as well, (e.g. for Amex cards) you can get an even larger signup bonus 🙌Permalink On twitter.com
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Just remember - The bigger the signup bonus the more you normally have to spend 💸 Also, only spend money you were already planning on spending rather than just spending money on the card just to get the signup bonus You want to pay back the card in full every month (see below)Permalink On twitter.com
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While rewards credit cards are great there are some things you should know 👇 1️⃣ First up, PAY YOUR BALANCE IN FULL EVERY MONTH 📆 You'll start accruing interest if you are not able to pay off your card in full every month, which gets really expensivePermalink On twitter.com
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2️⃣ Foreign currency transaction fees 💱 Most reward credit cards have a foreign currency fee (normally around 2.99%) for making non-GBP transactions on them You're better off using either a fee-free debit card or a 0% foreign exchange fee credit card insteadPermalink On twitter.com
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3️⃣ Annual/Renewal fees 💸 Some of these credit cards come with an annual fee You'll need to take this into consideration to understand if the benefits are worth this fee or not Some cards waive fees for the first year and then charge you a renewal fee a year laterPermalink On twitter.com
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4️⃣ Staying in control of your spending 🛍️ It's best to treat credit cards like debit cards - Only spent what you can afford at the time This ties in with the first point above as well - It can be really easy to overspend and end up paying a lot in interestPermalink On twitter.com
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5️⃣ Check which merchants accept them ✅ A lot of rewards credit cards are American Express (Amex) cards Not all merchants will accept Amex cards for payment Personally, this is why I have a Virgin Atlantic Reward credit card (it's a Mastercard card) as well as an Amex cardPermalink On twitter.com
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How do you get a rewards credit card? You'll need a source of regular income & a good credit score Some cards have stricter criteria (e.g. you need a certain amount of income) You can use eligibility calculators from comparison websites to see what cards you'd able to getPermalink On twitter.com
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The rewards credit cards that offer better rewards & perks are generally American Express cards They do offer some cards with no annual fee so I'd recommend researching those a bit more 🔍 There are also some good Mastercard/Visa reward credit cards (again, do your research)Permalink On twitter.com
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How I personally use reward credit cards: • I put all my monthly spending on them and pay them off in full each month • From time to time I also have a 'debit card only month' to make sure I don't rely on credit cards too muchPermalink On twitter.com
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Here are two great websites as well if you want to learn more about how to maximize the most out of reward credit cards 👇 • @HeadForPoints • @ThePointsGuyUK I got my first rewards credit card after going through a number of articles on both websitesPermalink On twitter.com
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Let's do a recap 🧢 • Earn rewards on your spending • Some cards give you extra perks • Use signup offers/referrals (plan your spending accordingly) • Pay your card in full every month & be aware of fees • Check out the websites above to learn more about earning points!Permalink On twitter.com
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I cover other personal finance topics in my newsletter @akashandmoney Subscribe to get those sent directly to your inbox 📬 Like this thread? 1. Retweet the 1st tweet above ♻️ 2. Follow me @akashgoswami_ for more threads I'll be dropping soon 🧵Permalink On twitter.com
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You can read the unrolled version of this thread here: typefully.app/u/akashgoswami_/t/l6YigzkqjfoCPermalink On twitter.com
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