Ready for your foray into the world of credit card rewards? Congrats! You’re on your way to landing a bunch of free and cheap stuff.
Before diving head-first into this crazy and oft-misunderstood realm, you need a little guidance. This is where we should step in to give you the dad talk about using credit cards responsibly.
But you’ve already had that talk, right?
So we’re here to show you how to use those rewards cards to your advantage and milk them for every last dime your owed. There are also a few tricks that can get you even more rewards on top of these credit card points.
Here are our five tips for making the most of your credit card rewards.
Set Your Credit Card Rewards Goals
Setting up your goals is oftentimes the hardest part of getting into the credit card rewards game. Sure, you can just apply for rewards credit cards willy-nilly, but you’re going to end up with a mixmash of cards that may overlap or not help at all.
Sit down and do a quick audit of your goals. Do you want to travel? Are you looking for cash back? Do you just want to build your credit and get points? Or are you not sure what you need yet but know it’s time to start collecting some rewards on the money you spend. With these in place, you can start looking into the right cards for you.
If you’re a travel junkie, then you’ll want to focus on travel rewards cards. Some of the better options in this range include Chase Sapphire Preferred, Bank of America Travel Rewards credit card, and Capital One Venture.
Just want straight cash back, you can check out Discover it Cashback Match, Bank of America Cash Rewards, or Citi Double Cash.
Had some credit boo-boos in the past and need the rebuild? Yup, you can get credit card rewards too. The Discover It secured credit card, Credit One Bank Secured Visa, and Credit One Bank Unsecured Visa all offer decent credit card rewards and are cool with your damaged credit report.
Not too sure what you want? That’s cool. You can check out all of these cards and find that many of them offer points transfers to other related cards. My Capital One Venture card, for example, allows me to do dollar-for-dollar transfers to any other Capital One rewards card. So, try to at least narrow down what you think you want, but if you change your mind down the road, you can apply for the card that best matches your situation and transfer the points.
Get the Best Rewards Credit Card for Your Spending Habits
This one drives me insane. I so often see self-proclaimed points geniuses using the same card at every single store. Look, this isn’t how it works, people. Each card has its sweet spot for points, and you want to max them out. There are some that overlap well into other areas, but finding that one do-it-all card is virtually impossible.
I suggest having about three cards: one for grocery shopping, one for fuel, and one for dining out. Make sure you find the cards with the highest rewards in each of these categories and use that respective credit card every time you’re doing that activity. If you’re feeling extra froggy, you may find cards to cover travel, department stores, or donkey-back trips on Everest.
Also, you have to make sure you’re getting the points you think you are. If you have a credit card that gives 5% in points back on groceries, but you do all of your grocery shopping at Walmart or Target, I’ve got bad new for you: You’re likely not seeing a dime of these rewards. Most grocery rewards points only trigger at grocery-only stores — Walmart, Target, et al are reported as department stores and, therefore, receive points as such… Womp, womp.
Prepare Before Shopping With Your Rewards Credit Card
This is another one that makes me nuts because without preparation, you’re missing out on maximizing your overall deal. Sure, the rewards are great, but what about coupons? Or better yet, what about cash back?
Cash back is a biggie here, as the world of online shopping has opened the door to 1 to 10% cash back on your purchases from sites like TopCashback and Ebates.What’s more, unlike coupons, which reduce your overall cost and credit card reward points, cash back allows you to get your full rewards and the percentage of cash back.
So, before doing your virtual shopping, check out your favorite cash-back site — I prefer TopCashback — and max out those credit card rewards.
Also, if you shop at places with their own rewards programs, like Sears and Kmart’s Shop Your Way program, make sure to check these out too. One great example is when Shop Your Way does 100%-back-in-points promotions. When you buy the product and get 100% back in Shop Your Way points, you still get your full credit card rewards points — it’s a win-win.
Avoid Interest Charges
With credit card rewards hovering in the 1 to 5% range and Interest in the 19 to 30% range, the latter is a credit card rewards killer. But you can easily avoid credit card interest and still get your rewards a few ways.
Pay Off Any Charges Immediately
This is the most immediate way to avoid interest, but it also requires dedication. Every time you spend even a dime on your rewards credit card, immediately make a payment on the card in that same amount. It may take a few days for the charge to show up on you account, so don’t be alarmed by the negative balance on your credit card.
Pay Off the Statement Balance
This is the method I — and most people — employ, as it requires less daily maintenance. When you receive your monthly statement in the mail or digitally, simply pay off the entire statement balance right then and there. Without a statement balance rolling into the next month, there is nothing the credit card company can charge you interest on.
If you’re really disciplined, you can set your auto-pay to pay off the entire statement balance so you never have to worry about it.
This does, however, require great control as you must avoid charging more than your bank account can pay off each month. Don’t be that person who maxes out their rewards credit card then starts using their debit card halfway through the month. This is a quick path to being broke and in debt. It’s all about self-control.
Let Your Credit Card Rewards Sit
Once you set a goal, don’t get distracted by the latest shiny object you can blow your points on. Much like a savings account, you have to let these points sit until you’re ready to spend them on what you intended to. I, for example, have thousands of dollars in points that I could blow on a nice 4K TV, but I am saving those for our family vacation later in the year.
I understand the struggle, as I am an impulse spender by nature. If you’re like me and can’t resist those points burning a hole in your Google Wallet, just ignore them. I look at my points balance once a month and never look at all the sweet stuff I could buy with them.