If you have a credit card (or more than one), you are likely familiar with the concept of credit card rewards. Depending on the kind of credit card you have, you may earn rewards when you:
- Shop at specific retailers, restaurants, or services
- Spend a certain amount on your card each month
- Buy items in various categories
- Book flights, hotels, and rental cars
When used wisely, credit card rewards can significantly enhance your budget and even reduce your balance. Below, we will discuss eight critical tips for maximizing your credit card rewards to always stay on top of your financial picture.
See Also: How To Live a Rich Life on a Budget
1. Take Full Advantage of Your Card’s Rewards
Many people miss out on some of their credit card benefits just because they don’t explore all of their potential rewards. Some cards also require you to “activate” certain rewards on your card’s dashboard or website; otherwise, they won’t redeem automatically.
So you should continuously check your rewards statement every month or when you pay off your card. To maximize your credit card benefits, you need to take full advantage of your possible rewards.
2. Pick Cards With Rewards That Match Your Habits
Check out the rewards program before you apply for a new credit card. You should aim to pick cards with rewards points or programs that match your particular spending habits. For example, if you tend to travel a lot and spend a lot of money on airfare, you should look for a travel benefits card with many flight or hotel points.
Similarly, if you typically shop at one clothing store all the time, check out that specific retailer. They may have a credit card that will provide you with benefits for shopping there.
3. Explore Different Redemption Options
Credit cards will often have multiple options when it comes to how you want to redeem your points, and you should explore each of these before making a decision.
Usually, cards will have three main options:
- Redeeming rewards for a gift card or voucher
- Redeeming your points for cash on your balance
- A physical check in the mail
If you want to redeem your points for a gift card, it can usually be for somewhere you spend money all the time, like Starbucks or a local gas station. However, if you want to credit your card, these points can help you reduce your overall balance and pay off your credit card faster. And if you opt for a check, redeeming your points can turn into cold, hard cash, which is always a plus.
4. Don’t Carry a Balance
If you carry a balance on your card from month to month, this reduces your available credit. Consequently, you have less opportunity to spend money and earn points on that card.
While spending a lot on one card to maximize your rewards makes sense, you should still make sure your card balance is something you can pay off at the end of the month. Credit cards aren’t about making exorbitant, unnecessary purchases but rather having a temporary credit line when you need it. The last thing you want is to be in a situation where you need to pay off debt.
5. Read Your Card’s Fine Print
Make sure you read the fine print of your credit card and reward agreement very carefully.
For example, suppose you are trying to earn credit card rewards by buying groceries. In that case, some cards restrict you from earning rewards at big box stores like Target or Walmart. Knowing these details will help prevent you from making mistakes with your credit card rewards in the future or missing out on essential points.
Even though it takes a lot of effort to read all of the tiny print that comes alongside your credit card agreement, you must understand your restrictions.
6. Earn Your Welcome Bonus
Many credit cards offer highly lucrative bonuses that attract customers into signing their initial agreements. And that’s fantastic! However, many users forget about their welcome bonus. As a result, they never even get to enjoy their welcome bonus.
The welcome bonus could be an airline standby pass, a high-value gift card, hotel points, cash, or another incentive. But it does you no good if you don’t take advantage of it. So make sure you earn your welcome bonus before any deadlines pass.
7. Get Only One or Two Store Cards
Getting a store’s credit card can be incredibly beneficial if you shop there regularly. However, if you start to accumulate many different store credit cards, it can be detrimental to your credit score.
For example, during the holidays, many stores lure new customers in with lucrative offers about the kinds of benefits their cards can provide. Yet, despite these impressive offers, you should only pick one or two store cards for your wallet at the stores you shop at the most frequently. This way, you won’t become overwhelmed, and you will have a firm grasp on your lines of credit.
8. Focus on Food and Gas
Food and gas are some of the most significant charges on your card. So focusing on the points or cashback rewards you can get from these purchases can boost your monthly budget if you’re smart about it.
Many people use their rewards cards to pay for groceries and essentials. Combined with some clever couponing, you can boost your food budget considerably. Just be sure you pay off your balance in full each month. Otherwise, any savings you would have gained will go down the drain. This is all part of being smart with your credit card to maximize any possible rewards.
9. Use Your Cards Wisely
The bottom line is that there are many different ways you can maximize your credit card rewards. However, perhaps only a few of these ways are helpful for you, depending on the kinds of cards you have.
Most cards will give you roughly the same amount of rewards points or cashback if you use them for all your spending. But maximizing your rewards is really about finding the few cards most conducive to your current spending habits.
If you should get into a situation where you’re in over your head, pick up a side hustle to pay off your debt as soon as you can. An easy side-gig like paid online surveys is an ideal way to earn money to catch up on your bills.
Overall, you should be mindful of your spending and optimize opportunities to earn the most money back. However, be smart about it and avoid holding too many cards that could damage your credit.