The Art of Maximizing Your Credit Card Rewards
Depending on your point of view credit cards can either be awful or awesome. Although they can easily tempt people into debt, when used wisely, they can actually be used to save you money. Of course getting the most of your credit cards will take some work on your part.
If you’re financially responsible (meaning you have an emergency fund, savings, etc. just in case) and want to earn extra rewards by utilizing credit cards, here are four tips to keep in mind:
Have a few different cards
Many have sought to answer one of the most common personal finance questions: what is the optimal number of credit cards a person should have? Unfortunately no one has ever really come up with a good answer but having more than one can come in handy when you’re trying to get the most out of them. Several cards have their own pros and cons and so by supplementing each of them you’ll have a well-round portfolio for rewards potential.
Consider one card with “bonus categories”
One of the reasons choosing a credit card can be so difficult is because there are several different ways cards will structure their rewards. Some may offer a flat percentage or point value for everything you purchase while others will vary depending on the spending category (3% on gas, 2% on dining, etc.). Furthermore some credit cards will even have category-based bonus offers — up to 5% cash back in some cases — that change from quarter to quarter . Having a card with bonus categories in addition to a good flat-rate card can be extremely helpful when it comes to maximizing your rewards. Of course this will require you to be diligent and know when the special categories change.
Keep track of offers
Speaking of using the right card, the biggest trick to getting the most out of your rewards is keeping them straight. One way to help do this is to think about what you intend to purchase and which card you should use before you leave the house. After you’ve decided, be sure to put that card at the front of your wallet just so you don’t accidentally grab your typical standby card out of habit.
Another thing you’ll want to look out for is special offers or discount that different card companies might offer through various partnerships with retailers. Often times these deals will be listed on your card company’s site and could net you bonus points, extra cash back, or discounts on the spot. Just be aware that some cards require you to activate these offers before you make a purchase.
Look for loopholes with retail cards
A common theme among consumers looking to add some new credit cards to their wallet is to turn to brands they’re loyal to. Along with airlines and hotels this often includes retail stores. While these types of store credit cards might offer you a sweet discount when you first sign-up, a few offer additional cash back over time. That’s why it pays to look for potentially lucrative loopholes in the offers these retailers send to cardholders. For example a department store may send frequent coupons to their credit card customers but might not require them to actually use that card when they go to make their purchases. In this case consider using a different cashback or reward points credit card (especially one with “department stores” as a bonus category) to buy your item(s) while still enjoying the discount you received for being a loyal retail cardholder.
Just as there’s no magic number of credit cards you should have there is also no one method that will work best for earning the most rewards. In many cases the cards that will work for you will depend on your situation and spending. Still, by considering multiple cards, keeping an eye out for bonus offers, and deciding what card to use before making your purchase, you can help maximize your credit card rewards and save money.