There’s no denying Aussies love to spend when we get the chance, and Christmas in particular is a time when our credit cards get a good workout.
But many of us aren’t quite sure how to get the best value from our favourite piece of plastic. Here’s a quick guide on how to improve your credit card game before we enter the Christmas spending frenzy.
Know your rewards incentives
It’s hard to make the most of your credit card this Christmas if you don’t understand the spending incentives attached to the card. It’s best to be very clear on how much you need to spend and what’s on offer once you hit that number.
For instance, your card may offer 100,000 Frequent Flyer or Velocity points if you spend $4,000 once approved.
If that’s the case, you should be tracking your spending and making sure you hit (but don’t exceed by too much) your required spend.
It’s a similar story with your points earned per dollars spent. If you can get a card that suits your spending in terms of stores that you already use then you can really make the most of your credit card this Christmas.
Don’t overspend on your credit card this Christmas
This is usually the biggest trap for Aussies when it comes to using credit cards at Christmas.
It’s easy to get carried away buying presents for the family and thinking that you’re getting the rewards from using your credit card at the same time.
However, if you start spending more to reach your rewards limit then you’re essentially fighting a losing battle. If you had saved that money, you may well have been able to pay for that flight or pair of headphones with your cash rather than your rewards points.
Budgeting is your friend here. It’s best to set your spending limit, calculate what is required versus discretionary spending and go from there.
Churn when the time is right
If you’re really looking to maximise your credit card usage this Christmas, then churning could be for you.
Churning is the process of rotating through various credit cards to maximise your rewards gained. This can be a great way to spread your spending across multiple cards and gain significant rewards.
However, having access to easy credit isn’t for everyone. You may feel more comfortable starting with something like Afterpay Touch Group Ltd (ASX: APT) or ZipPay from Zip Co Ltd (ASX: Z1P) as a form of easy credit this Christmas.
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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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