While many rewards enthusiasts focus on signing up for new credit cards to earn signup bonuses, not everyone has the time or desire to play the signup game. There is effort involved in tracking multiple cards, annual fees, and rewards programs, after all, and some people don’t want to spend their time or mental energy this way.
If you’re someone who falls into this category, you may be better off maximizing one or two cards instead of chasing rewards. Fortunately, you can earn plenty of rewards over time if you’re savvy about your card’s benefits and bonus categories.
The key to getting the most out of your rewards cards is understanding how they work and looking for opportunities to earn more points on your everyday spending. Here are some tips that can help.
What’s the difference between miles, points and cash back?
Credit card issuers offer different types of rewards. These rewards usually come in the form of miles, points or cash rewards. Rewards are redeemed in different ways depending on the credit card issuer’s rewards program.
Miles are usually associated with travel rewards. The miles you accumulate are usually redeemable for air travel and hotel stays. You can still redeem them for other things like cash back or credit cards, but the value of the miles will usually decrease. Cards that offer cash back allow you to earn money back on purchases. The money is either credited back to your credit card or deposited into a savings or checking account.
Rewards points are versatile and can be used in a variety of ways:
Use points for travel expenses
Convert points to cash back
Make purchases with points
Redeem for merchandise or gift cards
When you apply for a credit card, you should check the terms and conditions of the card’s rewards program. That way you can understand how you can redeem your rewards, what value they have, and how long they’re good for. Additionally, remember that you should only make purchases you can pay in full at the end of the month so that you’re not charged interest.
Focus on the cards that fit your goals and lifestyle.
There is a wide variety of rewards cards, and it can be tempting to apply for the first great card offer you see. However, just because the temptation of an initial generous sign-up bonus of rewards points or cash back sounds great doesn’t mean you should apply. If you’re in the market for a new rewards card or just reviewing the cards currently filling up your wallet, consider how you can realistically take advantage of them.
“Go back to your budget and find out where you spend most of your money and then look for a card that gives you the most rewards for that category,” said White. “If you are spending a ton of money each month on gas because you have an hour commute each day, get one that gives bonus points for that.”
If your work frequently takes you out of the country, relying on your favorite airline’s credit card for such expenses will quickly earn you rewards on everything tied to your business travel, provided you are allowed to use your personal card for which you get reimbursed. However, if you’re a homebody, picking one of the best cash back credit cards that rewards you for routine grocery purchases, gas tank fill-ups and the occasional dinner out will better serve you in the long run. Don’t be so “wowed” by marketing hype and what seems like a great deal if the upside of having that card wouldn’t matter in your life,” said Lynnette Khalfani-Cox, CEO of TheMoneyCoach.net.
Use Your Bank’s Online Shopping Portal
A good rule of thumb is to never go directly to a retailer’s website when shopping online. There are plenty of cash back websites that give you an incentive to shop at certain stores. Among those cash back sites are the ones offered through your bank or credit card company, and most banks and credit card companies have an online shopping portal to facilitate your savings. Two popular ones include Wells Fargo Earn More Mall (for those that carry a Wells Fargo Platinum Visa® Card) and Citi Bonus Cash Center (for those that carry a Citi card such as the Citi Double Cash Card).
Simply log in to the online shopping portal and click on the retailer’s website of your choice. You may notice that your bank or credit card company offers extra cash back rewards for shopping at certain stores. Do your shopping as normal and then use the associated credit card at checkout. The transaction will register with your bank or credit card company, so you will get your cash back rewards and bonus rewards where applicable.
You will likely find that many retailers you normally shop with are participants in these online shopping portals. You are essentially getting extra cash back for things you would buy anyway.
Stop paying full price for travel
Travel can be expensive, but you can save a bundle with free flights, hotels, and other travel thanks to credit card rewards. If you pay off your cards every month and don’t pay interest, you’ll come out much further ahead than if you used cash or debit.
Don’t settle for a card that doesn’t reward you. Whether you want cash back or travel rewards, there’s probably a credit card out there to meet your needs. All that’s left to do is apply, earn bonuses, and pick the best card for every purchase. If you do, free travel may be just around the corner.
Purchase Gift Cards
You can use your credit card to purchase gift cards for multiple purposes. If you have people doing work for you – whether that be babysitting or plumbing – ask them if they would mind receiving gift cards as payment. This way, you can put that purchase on your credit card instead of paying the person in cash. As a result, you reap those cash back rewards.
You can also use your credit card to buy discounted gift cards online. These gift cards, available on websites like Gift Card Granny and Cardpool, were likely gifted to people who have no use for them. In turn, you get the full value of the card at a discounted price as well as the additional cash back from your credit card.
If you want to maximize how much cash back rewards you receive from your credit card, these tricks are worth a try. The tactics above may not come naturally at first but, with practice, you can turn them into money-making habits.
One more thing: always remember to pay your credit card bill in full each month. If you do not pay it off in full and accrue interest, you are essentially negating the cash back rewards.