Credit card rewards allow you to earn while you spend. And you aren’t limited to just one reward program. You have the luxury of picking and choosing the lineup of cards that best serves your spending habits. While 2% to 6% cashback may not seem like much, it can add up over time, especially if you choose your cards strategically. Read on to learn how to maximize your credit card rewards.
4 ways to maximize your credit card rewards
Here are four ways to maximize your credit card rewards and earn as much as possible through your day-to-day spending.
1. Choose complimentary rewards credit cards
By signing up for multiple credit cards, you can earn more every time you spend. However, it shouldn’t just be any two or three cards. Your choices should be strategic and should reflect your spending habits.
For example, the Blue Cash Preferred® Card from American Express offers 6% cash back at supermarkets for up to $6,000 per year. That means you can earn up to $360 back on your grocery purchases. It also offers 6% cashback on popular U.S. streaming subscriptions like Netflix, Pandora, Spotify, YouTube Premium, and more.
While this sounds great, it falls short in some areas, offering 3% cashback on gas but only 1% on other purchases. Plus, it has a foreign transaction fee, so it won’t be suitable for traveling.
So how can you maximize all of your spending?
Just sign up for other cards to fill those gaps! For example:
The Pen Fed Platinum Rewards Visa Signature Card offers 5x points on gas purchases, with no limit on the number of points you can earn.
The U.S. Bank Cash+™ Visa Signature® Card offers 5% cashback (on up to $2,000 of purchases per quarter) on two categories of your choice (including department stores, cell phone providers, movie theaters, and more). Plus, you can earn 2% cashback on either grocery store, gas station, or restaurant purchases.
As for all other purchases, the Citi® Double Cash Card offers 2% cashback across the board. That’s double what most other cards offer.
These are just a few examples. Every card brings its unique benefits and drawbacks. Analyze where you spend the most, and sign up for cards that provide the highest reward rates in those categories, and you will maximize your earnings.
2. Use an app to maximize credit card rewards
The prospect of managing multiple credit cards and rewards programs can be nerve-wracking. How can you keep them all straight? Fortunately, there’s a simple solution available. There are many mobile apps that help you make the most of your credit cards.
Some apps let you log into all of your credit card accounts so you can manage them in a single dashboard. Through this platform, you can view your rewards balances, check rewards expiration dates, and browse membership credits. Some apps even let you exchange/redeem rewards and see different retailers’ merchant categories.
If you’re worried about mismanaging your credit card rewards, a good mobile app is a must. Popular options include Points and Award Wallet.
3. Choose the best redemption route
Another great way to maximize your returns is to understand how to use credit card rewards in a way that benefits you the most.
For example, with the Chase Sapphire Preferred card, you can redeem your points for several different rewards: cash, gift cards, travel, and more. If you redeem your points for cash, one point is worth $.01. But if you redeem your points for travel booked through Chase Ultimate Rewards, each point is worth $.0125. That’s 25% more. As such, you’ll get more bang for your buck by spending those points to pay for your travel expenses.
Always read your credit card rewards program carefully to find out all of your redemption options. Then, choose the ones that will offer you the best value.
4. Pay off your balance each month
Lastly, to get the most out of your credit cards, you must pay off your balance in full each month.
Under normal circumstances — except for certain balance transfer cards — you’ll pay interest on your outstanding credit card balance if it carries over past a billing cycle. These interest costs can quickly cancel out the rewards you’ve earned. So to get the most out of the card, always pay off the balance within the same billing cycle.
What to look for when choosing rewards credit cards
To determine the best rewards cards for you, you must first identify where you spend the majority of your money. Most people regularly spend on groceries and gas, so you’ll likely want a card (or cards) to maximize returns there. Beyond that, look at your monthly budget and find out where your dollars are going. Common categories include internet services, phone bills, entertainment, travel, and shopping at department stores.
Tip: Use an app like Mint to help you figure out your spending habits.
Once you’ve gained an understanding of your spending, you can start your search. Look for the cards that offer the best rewards for each of your favored categories. But when comparing cards, be sure to read all of the terms and conditions carefully. Many cards that offer great benefits also charge expensive fees. Obviously, the rewards must justify the costs.
Here’s a quick rundown of what to check:
- Annual fee: The cost per year to have the card.
- Annual percentage rate (APR): The amount you will pay in interest for balances that carryover past a billing cycle.
- Other fees: Fees for cash advances, late payments, balance transfers, etc.
- Introductory APR offers: Many cards offer introductory promotions on purchases and balance transfers (such as no interest for 18 months).
- Signup bonuses: A reward for opening the account and using the card (such as a $300 bonus for spending $1,500 in the first three months).
- Rewards: Note the rewards rate and how you earn. Be sure to look for limits on the rewards (e.g., how much you can earn per quarter or year.)
- Redemption options: Understand how the rewards can be redeemed and at what rates they are redeemed.
- Benefits: Look for the extra perks you get for having the card. These may include rental car insurance, 24/7 concierge, and roadside assistance.
- Customer reviews: What do other customers say about the cards? Are they happy with the card and the returns? Read real user reviews when vetting a potential card.
By comparing cards using these guidelines, you can find the offers that best align with your spending. We’ve made it easy to compare rewards cards side-by-side, complete with real-user reviews and all the essential info you need to know on SuperMoney’s personal credit cards page. Find the right products for your spending and start maximizing your credit card rewards today.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.