How to maximize credit card rewards & cashback

April 16, 2020

By Michelle Huffman

How to maximize credit card rewards & cashback

A family uses credit card rewards on groceries.

One of the best things about having a credit card is earning rewards.

In fact, responsible use of rewards credit cards can actually put your money to work for you, similar to earning interest or investing. Credit card strategies that earn points can provide you with free money through cashback rewards or benefits like free travel.

However, chasing points to maximize credit card rewards can carry costs. So it’s important to look at the big picture: You want to maximize your rewards with little effort while avoiding pitfalls. That means finding a credit card strategy that allows you to take advantage of the best unique offers of each card, automating everything and using your points wisely. Here’s how to do exactly that.

Avoid paying interest or late fees

Carrying a balance on your credit cards or failing to pay your bills on time, triggering interest payments and late fees, could dent or delete the benefit of rewards. So the basis of your credit card strategy would be to pay your balance.

Automate everything

If you really want to maximize your rewards while minimizing your effort, a smart strategy is to set monthly bills like utilities or subscription services to auto-pay using your credit card. Anywhere you can pay with a card, pay with rewards credit card instead of a debit card. Set it and forget it (all the while earning cash or points).

Don’t waste major purchases

This strategy requires forethought and savings, but it’s one of the best ways to really maximize your rewards. Charge major purchases like furniture, home improvements or even college tuition. This will give you an instant and major boost in points.

Make group purchases on your card

Be that person who quickly offers to put group purchases on your card, like the bill at a restaurant or tickets for a movie or live event that you’ll attend with a group. Yes, you may have to be the Venmo police, ensuring everyone pays up, but you will reap the benefit of those large purchases in the end.

Deposit cashback into a high-yield savings account

If you really want to put your money to work for you, deposit the cash rewards you earn from a cashback rewards card into a savings account and let it accrue interest. You will literally earn free money on your free money. This strategy works better with a savings account that offers a higher interest rate than a standard savings account, such as a high-yield or high-rate savings account.

Take advantage of welcome bonuses

You can easily rack up thousands of points (5,000 to 50,000 in some cases) in an instant through welcome offers— now that’s maximizing your credit card rewards. Bear in mind that most of these welcome offers have requirements, often a certain amount you must spend in the first few months after opening the card.

Ensure you can maximize high-value purchases

Many cards will double or triple points on certain categories of purchases, such as gas, groceries or restaurants. These are high-value purchases, so ensure that the card you take out matches your lifestyle. If you earn triple points going out to eat, but you prefer to make dinner at home and watch your favorite TV show, opt in for a card that will reward you for your everyday purchases – or even all your purchases.

Look for bonus offers and category boosts

Some cards offer bonuses for anniversaries, certain actions such as adding another authorized user, rotating cashback bonuses on different categories of purchases or promotions like double or triple miles for a set amount of time. Sometimes you must activate these offers to earn them. Often, it’s just the click of a button through your email or online account, but it does mean extra attention and effort.

Never let rewards expire

Most rewards, even cash, come in the form of points and points carry expiration dates. If you’re not in the habit of regularly charging, paying off and redeeming your points, you will have to note when they expire. Try setting calendar reminders to ensure you don’t waste your hard-earned points.

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