Maximum Return on Best Credit Offers

There has been a real explosion of credit cards that provide certain benefits over the last five years - reward points, cash back, 0% balance transfers, credit monitoring, discount gasoline, money-market savings, etc. So how do you get the most return from your card? In the past, the biggest credit card benefit was airline miles. Let's see how does that work out. The average airfare for a ticket that was paid for with credit card airline miles was about $400. And the average rewards program requires 25,000 to 35,000 miles to be credited a free ticket.

Since air miles are normally accrued mile-for-dollar, the average benefit is between 1 to 1.5% of what you spend. If you get an offer for a 1% cash back credit card, you'd be slightly better off getting the airline miles.

But in my opinion, the plenty of cards offering up for to 5% cash back are the best deal, as long as the fine print lines up. First, there are usually limitations on the shops where the 5% applies. You want a card that applies the 5% to where you spend the most of your monthly income. Credit card industry calls these expenditures 'everyday purchases', such as groceries, drug store goods, and gasoline, but exclude warehouse clubs. You should get a card with the widest number of retailers where you commonly spend money. Or, get a specific-store card for those large one-time purchases. For example, if you are buying new kitchen appliances from Sears, apply and use their card and you normally get 10% off. You may cancel it later when it has a zero balance. The next 5% cash back problem is an annual limit. Some credit cards will limit your annual earning to some exact amount.

The truth is that the only way you can protect you from being misled and avoid financial troubles is to study the terms and condition very carefully, even those that are written in fine print. American Express currently has a card called Blue Cash for heavy spenders. It offers only 1% cash back until you spend $6,500, and then it pays 5% cash back until you've spent $50,000. But there aren't nearly as many AmEx merchants as Visa/MasterCard merchants. (Again, AmEx and others may have exclusions like purchases at warehouse clubs). You can compare dozens of credit cards with rewards from a variety of websites. Getting the most from your card is like joining the battle: you may have a great plan in the beginning, but once cardholders start exploiting loopholes and creating unintended consequences, the card companies change their policies, it goes back and forth continually. So read all the fine print carefully before applying, and squeeze some extra money from your credit card purchases this year.