Credit card hacks for millennials & Gen Z: Maximize rewards, ditch the debt

Credit cards can be useful financial tools when used wisely. For millennials and Gen Z who are new to managing finances independently, it’s important to learn how to maximize credit card rewards while avoiding debt traps. Here are some key tips to get the most from your credit cards.

• Understand the basics

Before applying for credit cards, understand what impacts your credit score. Payment history and credit utilization (the ratio of balances to credit limits) are major factors. Having multiple accounts and a mix of credit types can help your score. Hard inquiries when applying for new credit temporarily affect your score negatively but on-time payments boost it over time.

• Choose the right card 

With hundreds of credit cards on the market, picking the optimal one takes research. Compare rewards, rates, annual fees, and promotional bonus offers across multiple cards. Consider your biggest spending categories – gas, groceries, dining out, etc. Find cards that maximize rewards for those purchases through bonuses or reward points.

Cards with annual fees may be worth it if you can offset that cost with enough rewards value. Or look for no-fee cards with solid rewards structures. For big spenders, premium travel cards can bring perks like airport lounge access and travel credits. Read the fine print to understand rewards redemption options and any rotating bonus categories. 

• Build your credit history

Applying for credit cards when you have little established credit history can be challenging. Consider becoming an authorized user on someone else’s existing account first. While you won’t get a physical card, any on-time payments will be reflected in your credit reports and scores.

Secured credit cards require a refundable security deposit that becomes your initial credit line. These help demonstrate responsible usage as your scores improve. Graduated programs level-up your limits over time and some unsecured cards are designed for those new to credit.

• Manage spending habits

The convenience of credit cards can often lead to overspending. Be disciplined about only charging what you can afford to pay off monthly. Automate payments for at least the minimum due rather than relying on memory. Pay more than the minimum when possible to avoid interest charges.

Use budgeting tools to track expenses and stay on top of your spending. Using debit cards or cash for discretionary purchases may help control unnecessary swiping. Mobile alerts when approaching your credit limits are another safeguard against overspending.

• Maximize rewards points

Leverage rewards program benefits fully by understanding redemption values and options. Compare the monetary value you’d get for straight cash-back versus redeeming points for purchases or travel. Factor in any transfer partners if you want airline or hotel loyalty perks.Use a credit card EMI calculator to manage your payments efficiently.

Look for opportunities to earn elevated bonuses through promotions, new cardmember offers, or targeted incentives. These can give your rewards balance a nice boost. Use bonus category spend trackers so you don’t miss out on extra points in revolving categories.

Watch for opportunities to earn additional points through referral bonuses, shopping portals, or activating in-app offers. Just don’t go overboard chasing rewards if it leads to overspending. Redeem points regularly to get ongoing value rather than letting them remain unused.

Use credit cards, but do not overindulge

Credit cards offer convenience and rewards when used conscientiously. But carrying balances, missing payments, and reckless spending can do more harm than good. Monitor credit reports, control spending with a budget, pay on time, and redeem rewards wisely. With the right knowledge and habits, credit cards can be beneficial tools for establishing your financial foundation.