Maximizing credit card rewards can result in a substantial amount of cash back, points or miles each year. However, it requires a disciplined strategy.
The first step is to identify which card earns you the most reward points in your preferred spending categories. Then, make every purchase with the card in order to maximize your earning potential.
1. Pick the Right Card
Credit cards offer a variety of rewards, including cash back, travel points and merchandise. The best card for you will depend on how you plan to spend and how you intend to redeem your rewards.
When considering a new card, assess the rewards rate and perks against the card’s annual fee to make sure they provide value for your spending habits. It’s also important to consider whether a card offers flexibility in redemption options, such as statement credits or gift cards, so you can optimize your rewards.
Some cards have rotating bonus reward categories, while others give a flat rewards rate. If you tend to forget about these categories or find it tedious to keep track of them, a card with consistent earning rates could be the best fit. Other features to consider include sign-up bonuses, annual fees, introductory APRs and additional benefits, like access to airport lounges. GOBankingRates’ experts have compiled a list of the top rewards credit cards of 2023, which can help you determine your best options.
2. Make Everyday Purchases
Using your credit card for everyday purchases can help you make significant rewards. But, the benefits can be limited if you don’t practice responsible spending habits and pay your balance in full each month to avoid interest charges.
A great way to earn more rewards is to choose a card that offers bonus categories that align with your spending patterns. For example, if you spend heavily at one particular retailer or hotel chain, getting a co-branded card can be a lucrative option.
You may also want to consider a card that offers perks like Global Entry/TSA Precheck application fee reimbursement, elite status and travel credits. And, if you don’t want to carry a balance, consider charging all your recurring monthly expenses to your credit card to maximize rewards.
3. Pay Your Bills in Full
Credit card rewards programs can be lucrative, allowing consumers to earn cash back, points or airline miles that can be redeemed for goods and services. However, it’s important for consumers to understand how to maximize these rewards and avoid potential pitfalls.
One of the most important steps is to pay your credit card bill in full each month. Carrying a balance can result in interest charges that negate the value of the rewards you earn.
Another tip is to track your credit card rewards and redemptions carefully. Many cards offer high rewards rates in specific categories such as dining, gas and travel. Knowing which categories you spend the most on and what type of rewards you are looking for can help you make the best use of your credit card rewards.
In addition, it’s a good idea to consider credit card sign-up bonuses, which can add significant value to your rewards earnings. However, it’s important to remember that these offers are typically only available for a limited time and require certain spending requirements within a set period of time.
4. Redeem Your Rewards
Credit card points, miles and cash back can add up to significant value over time, but the key is knowing how to maximize them. That involves choosing the right card based on spending habits, understanding your credit card’s rewards program and taking advantage of sign-up bonuses, bonus categories and other benefits.
Many cards allow you to redeem your accumulated reward points for gift cards, travel reservations or merchandise. To determine the value of your rewards, divide the cost of the redemption item by the number of points or miles required to purchase it.
In addition, it’s important to always pay your credit card bill on time. Carrying a balance negates the value of your rewards and can even put you at risk of losing them. To avoid interest charges, make sure you’re charging all recurring monthly expenses to your credit card and paying them off in full each month. This will help you build a strong credit history and keep your balances low.