How to Rack Up Rewards for Your Home Renovation

What's the hottest new trend for buying cars or doing a home remodel? Plastic.

That's the analysis from The Wall Street Journal's Market Watch and The Washington Post, both of which recently covered how consumers are using credit cards to pay for all their major purchases. However, this isn't because the consumers were cash-strapped victims of the Recession; they were savvy shoppers looking to score some A-list perks through rewards credits cards.

Rewards based credit cards aren't new. Airlines first partnered with banks years ago to offer frequent flyer miles to anyone using their sponsored credit cards. These days the rewards—and ways to earn them— have become much more diverse, from luxury travel and gift cards, to gas for your car or coffee in your mug. The benefits, it seems, are endless.

What is startling is the evolution of rewards cards. In the past, most consumers used their cards for average purchases, such as weekly grocery shopping or a dinner out. But as the Wall Street Journal article says, this new move is "all part of a strategy to rack up credit-card reward points that can be redeemed for things like VIP packages to sporting events and luxury vacations. Since they’re already spending money on renovations, the homeowners say, they’d like to get something extra in return—a perk that cash doesn’t offer."

And the best part? Anyone can take advantage of this strategy.

Find the Right CardThe first step is finding a card that matches what you want in return. CreditCards.com is a great resource, offering visitors multiple card options, with all the benefits and restrictions easily explained on one page.

The current top options include:

Rewards Credit Cards - Simple and straightforward, these cards "reward" you for using them with cash back incentives and rebate programs.

Points Rewards Credit Cards - Offering a bit more variety, these cards let you earn rewards points that can be redeemed for things like merchandise, gift cards or cash back.

Cash Back Credit Cards - These cards reward you for using them with cash back incentives and rebate programs, but they usually require a good to excellent credit rating for approval.

Airline & Travel Cards - Earn frequent flyer miles or rewards points when you travel, or when you use these cards for normal purchases. The miles or points can be redeemed for airline discounts or free nights at participating hotels. Great for anyone, but particularly beneficial to people who travel a lot for work or pleasure.

Things to Know
>>Examine the bonuses these cards offer for signing up, as well as how many rewards you get for purchases. Some cards may offer a hefty sign-up bonus, but only give one reward point per purchase, whereas cards with lower sign-ups bonuses may offer more points for purchases.

>>Not doing a major renovation or purchase? Use these cards to pay as many expenses as you can every month, then pay your balance in full so you don’t incur interest charges.

>>It's not wise to get a new card, take your sign-up bonus points and then cancel it; that can negatively impact your credit score.

>>Don’t carry a balance on your credit card or spend outside your means. The interest and fees can cost you more than if you saved up and just paid for the items directly.

If you can get something you really want for purchases you're already intending to make, then it's really a no-brainer.