Credit cards are a solid way to get the most out of everyday spending when used wisely. Rewards credit cards in particular allow you to earn points, miles, or cash back when you use your card to make purchases — adding up to savings over time with regular spending.
These cards offer a great opportunity to earn rewards on purchases you would have made anyway, and the best credit cards offer rewards with a high earning potential, competitive rates, and as few common card fees as possible.
Maximize your rewards by knowing the ins and outs of your rewards credit card.
Here are the top strategies to maximize credit card rewards.
Match your reward structure to your spending habits
The best rewards credit card for you should help you make the most of your habits and lifestyle. Because different credit cards reward different rewards on spending, start by clearly identifying what you spend your money on most to maximize your earnings.
If you travel frequently, for example, you might want to compare credit cards that reward cardholders with boosted points, miles, or cash back on travel expenses. If you spend a lot on groceries and gas, look for a card with higher earning potential. If your spending habits are generally mixed, and you don’t tend to spend a lot in any one category, a flat-rate cash-back credit card could be an ideal fit.
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Optimize rewards categories
Check your card stack for the one that offers the best rewards for what you’re spending on. Say you’ve just opened the Blue Cash Preferred® Card from American Express, which offers 6 percent cash back on the first $6,000 you spend at U.S. supermarkets in a calendar year, and then 1 percent after.
If you’ve been paying for groceries with a flat-rate card like the Wells Fargo Active Cash® Card, which offers unlimited 2 percent cash rewards on purchases, you’ll want to use the Blue Cash Preferred instead to earn 4 percent more cash rewards (up to the yearly cap).
Further, issuers like Chase and Discover offer 5 percent rotating bonus category cards that feature new cash-back rewards categories every three months. If your new card has rotating bonus categories, you should activate those categories as soon as possible and keep an eye on the rewards calendar so you can plan ahead.
Earn your sign-up bonus
Many credit cards come with lucrative sign-up bonuses that can earn cardholders hundreds of dollars in rewards if they meet stated requirements after opening an account. In most cases, credit card issuers require cardholders to spend a specific amount of money during the first few months after opening a card to be eligible for the sign-up bonus. To ensure you qualify, read the terms of the bonus offer carefully and structure your spending accordingly. The bonus can benefit you financially — you can apply it toward a monthly payment or large purchase, for example.
While you should always borrow responsibly and refrain from spending more than you can afford, the qualifying period for a welcome bonus is a great time to make significant purchases you’ve been planning on.
Explore redemption options
Go to the rewards portal for your card’s rewards program to learn more about redemption possibilities. If your card offers cash back, you can choose from a statement credit, direct deposit, or a check. If you’re earning miles, the portal will tell you how to redeem those miles for airfare, hotel stays, and other benefits. And if you’re earning points, you may be able to choose from gift cards, merchandise, charitable donations, and more.
Remember that the value of your redemptions is not always the same across choices. For instance, redeeming for travel purchases might get you a 1-cent-per-mile value, while merchandise might only get you 0.8 cents in value. There could also be a rewards balance requirement to make redemptions, such as a minimum of $25 in cash back earnings to redeem for a gift card.
Take advantage of all your card’s perks
In addition to earning rewards like points, miles, or cash back, most rewards credit cards further sweeten the deal with added benefits. Travel credit card perks can include airport lounge access, credits for hotel stays, and insurance for lost or delayed luggage. Cardholders can also often take advantage of discounts on Global Entry or TSA PreCheck and travel insurance covering their trip’s interruption, cancellation, or delay.
Many cards come with perks related to shopping and entertainment, including extended warranties on items purchased with your card and discounts and special offers for shopping with certain retailers. Cards can also come with features like fraud and purchase protection.
Pay off your bill in full each month
Putting all of your purchases on a credit card can help you to maximize your rewards. Still, the earning potential of a rewards credit card is typically negated if you carry a revolving balance from month to month. This is because cards with a revolving balance accumulate interest, which you must pay in addition to paying off your existing purchases.
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