10 Tips to Maximize Your Credit Card Rewards While Keeping Risk Low
various credit cards

Money at 30: 10 Essential Credit Card Rewards Dos and Don’ts

Depending on who you ask, credit cards are either the enemy of good personal finance or an exceptional tool that can help your money go further. Personally, I find myself somewhere in the middle, although I’ve definitely come to appreciate the good aspects of credit cards in recent years. As a result the number of cards in my wallet has steadily grown as I’ve learned more about how to maximize rewards and use benefits to my advantage.

10 Essential Tips for Earning and Using Credit Card Rewards

So how can you make the most of your credit cards? Let’s look at 10 essential things beginners should and shouldn’t do when it comes to earning and utilizing credit card rewards:

DON’T: Carry a balance

This is pretty much the cardinal rule for credit card rewards. By failing to pay off your full balance on time each month, you’ll likely be spending far more in interest than you’ll gain in rewards. For example, while earning 5% cash back on a given category is great, you may end up paying upwards of a 20% APR on all of your purchases if you carry your balance to the next month. Therefore, if you don’t trust yourself to pay off your card each month, it’s better to stay away than try to play the game.

DO: Research new potential cards

When you’re ready for new credit card, it’s always a good idea to do your research. Luckily these days there are several resources that can help point you in the right direction. Among them are sites like Credit Karma, NerdWallet, The Points Guy, and more. In each case you’ll be able to browse different cards, compare them to similar products, and hopefully find one that makes sense for your needs.

DON’T: Get a store credit card (probably)

Going hand in the hand with the idea of properly researching new cards before applying, it’s usually not a great idea to make your credit card decision at the checkout counter. While saving 10-20% on your purchases might sound nice at the moment, there are several reasons why store credit cards are typically not worth your time. For one, they may only be good at a single store (although some do partner with American Express, Visa, or others). Moreover some store cards offer comparatively low credit limits. This could then inflate your utilization and hurt your credit score. Thus the moral of the story is to not be impulsive and carefully consider store credit cards as you would any other.

DO: Look for possible bonuses

As you’re doing your due diligence on new card opportunities (right?) you may come across special sign-up bonuses, welcome offers, initial spending bonuses, or other names for what are essentially the same thing. In order to entice you into applying for a new card, many issuers will pay out a cash or point bonus once you reach a certain amount of spending in your first days as a cardholder. It seems a typical length of time for this spending window is 90 days but it can vary. As for the amount you’ll need to spend or what you’ll get for it, that will depend on a number of factors. Moreover, there are times when these offers can increase, whether as part of a large promotion or due to what are known as “targetted offers.” Just as this name implies, these deals aren’t open to the general public but are instead only available for some, such as those who have previously shown interest in the brand, those being referred by others, or really any other reason. P.S. – one place where you might encounter these targetted offers is Card Match.

While most bonuses utilize the initial spending structure, there are some exceptions. The Discover It card is one such example as, instead of offering a set bonus up front, it instead matches the cash back users earn during their entire first year. Thus it’s always smart to keep an eye out for potentially lucrative offers but ensure that you fully understand them before applying.

DON’T: Overextend yourself for a sign-up bonus

When applying for a new card, there’s a good chance that the sign-up bonus is a major motivating factor. That’s also why you’ll find blog entries and services all about helping credit card customers meet their minimum spend in order to earn their initial spending rewards. However there’s a difference between getting creative about your spending in order to reach your goal and overspending. If you need to make extra, expensive purchases in order to earn your bonus, it may not be worth it — especially if it causes you to carry a balance or borrow from elsewhere.

Once again, this is where doing your advance research and calculating can really come in handy. Before signing up for a card, come up with a realistic plan for meeting your minimum spend.

DO: Apply for multiple cards (if they make sense)

If you find a credit card you like and you’re still able to keep your utilization low while using it, why bother getting another? The answer is that there’s no perfect credit card that tops the rest in every category. Instead the optimal strategy is to find a variety of cards that complement each other. For example, my Discover It card is great for its rotating 5% quarterly categories while the 4% back on dining and 2% back on online purchases that my Uber Visa earns make these two cards work well in tandem. Furthermore the recent addition of the Apple Card to my (digital) wallet came about after I realized that I could make use of its 2% and 3% categories.

Understandably you may feel like having too many credit cards — including juggling due dates and carrying around all of that plastic — may be more trouble than it’s worth. To that point, you should always stick to what you’re comfortable with. That said, adding just a few key cards to your wallet could actually benefit you overall.

DON’T: Get several cards with identical benefits

With the previous explanation out of the way, you can probably see why it doesn’t make much sense to get two cards that offer pretty much the same things. Remember: the goal isn’t to have several credit cards just to say you have them. Instead you’ll want to be strategic with your plastic in order to maximize rewards.

DO: Explore your best redemption options

Another wrinkle that complicates some credit card options involves redemption. This is especially true of cards that offer points instead of cash, although there are some cash back cards that also present some choices to make.

With many cards, you’ll have to decide how you’d like to cash in your rewards. Some typical options include cash transfers to a bank, a statement credit, direct redemption at select retailers such as Amazon, gift card purchases, point transfers to travel partners, and more. What makes things difficult is that not all of these options are created equal. One example is that the Discover It card allows you to score bonuses of $5 or more when trading in your cash back for gift cards from participating retailers. Meanwhile, if you look at American Express’s calculator for Membership Reward points, you’ll notice that the value per point varies by what you’re redeeming for. In this case a statement credit earns you just 0.6¢ per point while transferring your points to a partner airline might allow you to see 2¢ per point or more in value.

While this all may sound a bit overwhelming at first, it will make a lot more sense when you’re actually looking to cash out your points. In the meantime, it’s just something to be aware of.

DON’T: Make purchases just to earn rewards

Bringing things nearly full circle, just as it’s a bad idea to carry a balance on your card because you wanted to earn rewards, making unnecessary purchases in the pursuit of points is also rarely a smart idea. It’s really the same fallacy that occurs when you see an expensive item on sale for far less — sure it’s half price but that doesn’t mean it’s worth buying. Keep this in mind when shopping and don’t let this false idea creep its way into your brain.

DO: Calculate value expectancy from annual fee cards

Finally, if you’re considering a card with an annual fee, calculating the value expectancy can be extremely helpful. To do this, you’ll want to consider any credits or entitlements, return from anticipated spending, and other benefits to determine if you’ll come out ahead. What’s more, you’ll likely need to conduct this practice each year as your renewal approaches.

When making your calculations, you’ll also want to be honest with yourself when valuing certain perks. For example the American Express Platinum offers $200 in Uber credits per year but, if you don’t use the service much or these credits cause you to spend more just to use them, then you shouldn’t include the full value in your equation. By the way, a great resource for helping you figure out if an annual fee card makes sense for you is AskSebby.com where you’ll find several card calculators to help walk you through the process and ensure you don’t miss anything.


In my view, when used properly, credit cards can be a beneficial personal finance tool. Of course the emphasis there is on “properly.” While those prone to overspending are probably better off sticking with cash and debit cards, those willing and able to use their cards responsibly can reap rewards. It may take some research, time, forethought, and perhaps some clever tricks, but you too can ensure that your credit cards are rewarding.

Author

Kyle Burbank

Head Writer ~ Fioney
Kyle is the head writer for Fioney. He is a personal finance nerd, constantly looking for new apps and services to test and incorporate into his own financial game plan. In addition to his role at Fioney, he's written for other publications including Born2Invest, Lifehack, and Laughing Place, as well as his own site Money@30. He also creates personal finance and travel-related videos for Money@30's YouTube channel, which has garnered more than 2 million views. Currently, Kyle resides in Springfield, Missouri with his wife of 10 years. Together, they enjoy traveling (including visiting Disney Parks around the world), dining, and playing with their dog Rigby.

Other Articles by Kyle Burbank

Robinhood Gold Credit Card

Robinhood Reveals New Credit Card, Reimagined Flagship App

During its "New Gold Standard" keynote event, Robinhood made some major announcements, including the launch of a new credit card. About the Robinhood Gold Card: The headlining announcement was the reveal of the new Robinhood Gold Card. In a bit that paid homage to Steve Jobs' iconic iPhone announcement, Robinhood co-founder and CEO Vlad Tenev teased plans to release three different cards (a starter card, an everyday card, and a...
holding an American Express Gold card in front of a table of food

How to Maximize All of the American Express Gold Card Credits

One of the most often-used cards in my wallet is the American Express Gold Card. Like its "big brother" the Platinum Card, the Amex Gold card commands a sizeable annual fee but attempts to offset that expense by including monthly credits. Of course, the card also includes some lucrative rewards categories and redemption options that further give it value. Having recently explored the best ways to maximize the Platinum card's...
US Bank Altitude Connect Credit Card

U.S. Bank Plans Major Changes to Altitude Connect Credit Card

U.S. Bank has revealed several major changes to its Altitude Connect credit card, which will arrive this September. About the changes: The first update is that the card will no longer carry an annual fee. Previously, the Altitude Connect card came at a cost of $95 per year — although this was often waived for the first year. Those who apply for the card now will enjoy a $0 introductory...

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox

A Guide to Building Credit and Increasing Your Credit Scores

When it comes to credit, there’s some good news. The average credit score in the United States has been steadily rising in recent years, coming in at 715 in 2023. That may be because, today, consumers not only have more ways to access their credit reports and scores than ever before but also because there are an increasing number of options that Americans have for building credit in the first...

2024 SoFi Checking and Savings Review

Ever since I started taking an interest in the FinTech sector, one company whose name I’ve seen pop up over and over again is SoFi. Lately it seems as though that theme has been sent into overdrive as the company has not only become a household name thanks to its stadium naming rights deal but also because of the company’s continued product expansions. The most interesting development in my mind...
Chase Freedom Flex card

Chase Reveals Q2 2024 Freedom 5%(+) Bonus Categories

Chase has announced its bonus category picks for the second quarter of 2024 — including some interesting twists. About the categories: As April approaches, Chase has revealed what categories Freedom and Freedom Flex cardholders can earn bonuses on. From April 1st through June 30th, customers can earn 5% (or more) in three categories: Amazon.com, Hotels, and Restaurants. Similar to how Chase embraced a "New Year, New Me" theme last quarter,...

FedEx Announces Winners of 11th Annual 2023 Small Business Grant Contest

Nearly three months after the entry period ended, FedEx has announced the winners of its 11th annual Small Business Grant Content. This year's event saw more than $300,000 in funds going to a variety of small businesses across the nation. Last month, the company revealed 100 finalists, with that list now being narrowed down to just 10 winners. This year's grand prize winners included KindVR, The Cupcake Collection, Up In...
H-E-B and Central Market  credit cards

Imprint Launches Credit Cards from H-E-B and Central Market 

The FinTech Imprint is partnering with the popular Texas-based grocery chain H-E-B for a pair of new rewards credit cards. This week saw the launch of the H-E-B Visa Signature Credit Card as well as the Central Market Visa Signature Credit Card. With these two (nearly identical) options, customers will be able to earn rewards on groceries and beyond. First, both versions of the card earn up to 5% back on select...