Q: We collect points on our credit cards to help pay for our vacation costs but sometimes it can be hard to use them. Some of our loyalty programs now let us redeem the points for cash instead of flights. We’ve been collecting for years, but we’re starting to wonder, is collecting points actually a good deal?

A: Reward and loyalty programs are heavily promoted in Canada. While they are marketed as a benefit to us, the consumer, they are big business for the companies who administer them. The trick to figuring out if the points on a particular reward program are a good deal for you or not is all in how you collect and later use them.

How to Use Reward Credit Cards & Not End Up in Debt

Whether you view your rewards cards as friends or foes has a lot to do with how you use credit and manage your household spending. Here are some things to keep in mind:

• Decide which type of loyalty rewards you want to collect. With points now associated with major credit cards, instead of cards specific to only certain stores, it’s much easier to amass points in only one program.

• Choose a program that lets you earn and redeem points on purchases you regularly make. Justifying spending a little extra just to get points can add up to a lot of debt. In fact, many people routinely spend up to 15% more on purchases when they shop with a reward credit card rather than with cash. Furthermore, if you’re not able to keep your credit card in good standing, you may be restricted or have difficulty redeeming your points.

• For many people, cash back or merchandise discounts have become more popular choices over travel points. Be aware of any restrictions for redeeming points, especially travel points. A recent change with many programs has been the introduction of expiry dates on collected points.

• Reward cards are a marketing tool and they can limit your ability to shop around and find the best deal if you are not careful. “Cash back” programs might not seem as attractive as free flights or merchandise; however they allow you to maintain more choice and control in the long run.

Reward yourself by using your loyalty cards wisely and not ending up with credit card balances you can’t afford to pay off. Sometimes the biggest reward is actually the one you give yourself!

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