Use Credit Card Rewards Programs Wisely

With all the negative news surrounding credit card debt, you may get the impression that using a credit card is always taboo. However, it is not the credit card that gets one into trouble; it is the one who uses it.

Participating in a credit card reward program can be a rewarding experience. If a credit card is managed properly, there are many reward programs out there for you to take advantage of and possibly get a free trip to Europe.

First, you should evaluate the reward program for the amount of dollars you need to spend for the reward points received. Not all reward programs are created equal. You want to get the biggest bang for your buck.

Next, evaluate how often you would use it for the specific usage. There are a variety of reward programs out on the market - cash back, gasoline, airline miles, hotels, restaurant, travel and leisure - just to name a few.

Personally, I prefer not to select credit cards that are geared towards airline mileage. One main reason is you never know if that airline will be in business by the time you do accumulate enough points to use it. In addition to that, there can be a lot of restrictions that just won't meet your needs.

I prefer having a reward program that is geared toward hotel points. Over a four-year period, I was able to accumulate enough points to give me a free three-week stay in Europe - all at fine hotels. This credit card reward program was with Hilton Hotels.

If you plan to accumulate your points, you must make sure you are disciplined and can manage a budget well. I developed a monthly system where I would try and charge everything I could no matter how small it was. I would take an envelope and label it the month of my purchases. Then, I would write the amount down and put the receipt in the envelope.

Twice a week, I would check my online statements and compare it to my purchases for the month. It is important to have a monthly budget for spending in certain expense categories and keep control of your purchases; then your spending doesn't get out of hand. If you do not use a budget, you will not know how much you spend. Hence, you could get into debt. Most importantly, you must pay off the purchases within your statement period so that you do not accumulate any interest charges. Otherwise, you are defeating the purpose of saving for a trip.

Throughout the year, these credit-card reward programs might have certain incentive programs like refinancing your home through a specific lender. I was able to achieve around 100,000 reward points when I did this, which gave me about an extra four-day stay in a European Hilton Hotel.

With my reward program, I can even present an overnight stay in a hotel as a gift to a friend or family member. What better way to give a memorable gift to someone and not have it cost anything out of your pocket.