With the popularity of credit card rewards programs on the rise, savvy consumers are on the lookout for the best tips and tricks to maximize their point earnings. A recent survey revealed that a staggering 67% people are not fully utilizing their credit card rewards, with the average American household holding $6,354 in unused credit card rewards. This indicates that many are leaving massive savings on the table.
In this comprehensive guide, we will explore seven proven strategies to help you extract the maximum value from your credit cards and their loyalty programs. From selecting the right card that aligns with your spending habits to combining points across multiple rewards programs, these tips can help you unlock substantial savings and even free vacations.
By fine-tuning your approach with the latest insider techniques, you can save hundreds or even thousands of dollars each year. Let’s dive into these seven essential steps for dominating credit card rewards and learn how to maximize every swipe and mile earned.
01
of 08Choose the Right Card for Your Spending Habits
The first step to maximizing your rewards is selecting a credit card that aligns with your spending habits. Analyze your monthly budget to identify the categories where you spend the most.
For instance, if your highest expenditure is on groceries, a card like the Amex Blue Cash Preferred, which offers 6% cash back at US supermarkets (up to $6,000 per year in purchases), might be a good fit. Alternatively, the Citi Custom Cash Card provides 5% cash back on up to $500 spent in your top eligible spending category each billing cycle.
If you frequently shop at drug stores, consider the Chase Freedom Flex, which offers 3% cash back in that category. For those who travel often, the Chase Sapphire Preferred is an excellent option, offering 2x points on travel and dining.
Remember to consider ongoing perks like complimentary hotel status or lounge access when comparing cards. Ultimately, selecting a card that matches your lifestyle is crucial for maximizing rewards.
02
of 08Pay Your Balance in Full Each Month
One of the most crucial strategies for maximizing your credit card rewards is to pay your statement balance in full each month. This is because any interest charges incurred by carrying a balance can quickly negate the value of the rewards you’ve earned.
For instance, if your credit card has an APR of 19% and you carry a balance of $1,000, you would incur around $15 in interest each month. This amounts to $180 per year, which is essentially wasted money on interest charges!
To avoid this, consider setting up automatic payments. This way, your bank will automatically pay the statement balance from your checking account each month, ensuring you never miss a payment deadline.
By avoiding interest charges, your rewards can compound dramatically over time. For example, earning 2% back on purchases could translate to over $500 in rewards on $25,000 of annual spending. However, this return is entirely wiped out if you’re paying a 19% APR on a carried balance.
Keep in Mind
Not to overspend just to earn rewards! It can be tempting to make unnecessary purchases to rack up points or cash back, but this can lead to carrying a balance and paying interest, which defeats the purpose of earning rewards in the first place. Create a budget and stick to it, making sure to use your credit card for planned expenses rather than impulsive purchases.
03
of 08Use Your Card for All Eligible Purchases
To maximize your rewards, it’s crucial to use your credit card for as many eligible purchases as possible. Even small, daily expenses can accumulate over time.
For instance, if you spend $3 on your morning coffee each workday and your credit card offers 2% back on dining purchases, this seemingly insignificant daily expense can add up. Over the course of a year, spending $3 each workday amounts to $750 ($3 x 5 days x 50 work weeks). At a 2% rewards rate, this would earn you $15 in a year.
Other small purchases that can generate rewards include:
- Groceries and food shopping
- Gas and transportation
- Online shopping and subscriptions
- Monthly utility bills and cell phone payments
Evaluate the recurring expenses in your budget and switch as many as you can to your rewards credit card through automatic billing. Surprisingly, you can even earn rewards by paying your credit card bill itself with the card!
The key is to route every eligible purchase through your card to maximize your earning potential. Even a few extra rewards dollars each month can add up over time. The more you can put on your card, the bigger your payout will be.
Keep in Mind
Some cards have a maximum limit on the rewards you can earn in certain categories. For example, the Amex Blue Cash Preferred offers 6% cash back on groceries, but only up to $6,000 in purchases per year. Make sure to be aware of these limits and plan your spending accordingly to maximize your rewards.
04
of 08Capitalize on Introductory Offers
Sign-up bonuses are one of the fastest ways to earn a significant boost in credit card rewards. These introductory offers are incentives for opening a new account, often providing the opportunity to earn hundreds of dollars in value.
For instance, the Chase Sapphire Preferred currently offers 60,000 bonus points after spending $4,000 in the first three months. With Chase Ultimate Rewards points valued at 1.25 cents each for travel redemptions, this bonus is worth $750!
Other lucrative introductory offers include:
- Capital One Venture Rewards Credit Card: Earn 75,000 miles ($750 in travel) after spending $4,000 in three months.
- Amex Gold Card: Earn 60,000 Membership Rewards points ($600 in value) after spending $4,000 in six months.
- Citi Premier Card: Earn 80,000 ThankYou points ($800 value) after spending $4,000 in three months.
It’s important to capitalize on these bonuses and then cancel the cards before any annual fees are charged unless the perks justify the cost. Introductory offers provide tremendous value if you can meet the minimum spending requirements.
Keep in Mind
Some cards, like the Chase Sapphire Preferred, waive the annual fee for the first year as part of the introductory offer. This can provide additional value, but make sure to evaluate whether the card is worth keeping after the first year, considering the rewards and benefits it offers.
05
of 08Maximize Bonuses Through Strategic Spending
If you anticipate large purchases or expenses, you can strategically time them to maximize rewards.
For instance, many cards offer up to $500 in bonus cash back after you spend $3,000 in the first three months. If you have an upcoming home repair, furniture purchase, or other significant outlay, try to time it so you can earn the bonus.
Similarly, cards often offer 5x or 10x rewards in rotating categories each quarter. You can plan big trips and vacations around these 5x hotel or 10x airline mile offers. The Chase Freedom Flex and Discover It are examples of cards with these rotating bonuses.
Also, Some cards offer additional bonuses for spending in certain categories. For example, the Chase Sapphire Reserve offers 3x points on travel and dining. Make sure to use your card for these types of purchases to maximize your rewards.
Anticipating significant expenses and aligning them with bonus categories or spending threshold offers is an easy way to maximize value. Even just charging a large tax payment to your card could help you earn a sign-up bonus.
Maximize the value of special promotions by planning ahead and making any large purchases in eligible bonus categories and at times that align with higher rewards rates.
06
of 08Research and Redeem the Best Rewards
The value of credit card points and airline miles can vary significantly when redeemed, so it’s important to research your options to get the most value.
For example, American Express Membership Rewards points are often most valuable when transferred to airline partners for premium cabin redemptions. 100,000 Amex points could get you a $3,000 business class flight to Europe, whereas redeeming them directly for cash back would only yield $700.
Similarly, Chase Ultimate Rewards can offer increased value when transferred to travel partners like Hyatt, where you may get approximately 2 cents per point in value.
On the other hand, Capital One miles can be most useful as direct statement credits for travel purchases, while Citi ThankYou points offer maximum returns when redeemed for gift cards.
Different programs offer the best value in different redemption scenarios. It’s important to crunch the numbers when you’re ready to use your points to maximize their true value. Don’t just take the default cash back option without considering if there’s a more lucrative airline or hotel redemption available.
Remember
Some rewards programs charge a fee to transfer points to airline or hotel partners. For example, British Airways Executive Club charges a fee to transfer Avios to another person’s account. Make sure to factor in any transfer fees when evaluating the value of your rewards.
07
of 08Combine Points From Multiple Cards
A powerful strategy to maximize rewards is to hold credit cards from multiple issuers and transfer points between your accounts.
For instance, you could pair the Chase Sapphire Preferred card, which earns Ultimate Rewards points, with the Amex Gold card, which earns Membership Rewards. This gives you the flexibility to transfer points to various airline and hotel partners, maximizing value.
Some great combinations include:
- Chase Sapphire + Amex Platinum: Transfer both points to Hyatt for premium hotel stays.
- Amex Gold + Citi Premier: Combine ThankYou points and Membership Rewards for maximum airline mileage transfers.
- Chase Sapphire + Capital One Venture: Transfer Capital One miles into Chase Ultimate Rewards for added redemption options.
By diversifying your credit card portfolio across issuers, you can pool points together when needed to redeem for high-value rewards. This unlocks more redemption possibilities compared to sticking to one program.
The key is finding cards that work well together and provide complementary benefits. Do your research to find the optimal pairing for your needs.
Also, Some credit card issuers, like Chase, allow you to combine points with a spouse or family member. This can be a great way to pool points and redeem them for higher value rewards, such as a business class flight or a stay at a luxury hotel.
08
of 08Conclusion
Scoring free flights, hotel stays, and cash back with credit card rewards is both an art and a science. By being strategic with your credit card usage and redemptions, you can unlock tremendous ongoing value from these programs.
The key is to select the right cards that align with your spending profile, consistently pay off balances in full, maximize bonus categories, capitalize on promotions, and research the most lucrative ways to redeem points.
