NerdWallet’s Best Credit Card Tips for August 2022

As you're navigating expenses this month, credit card strategies can help you score some savings on purchases.
Aug 5, 2022

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By now, you might be feeling the negative effects of the Federal Reserve’s latest hike on interest rates if you’re carrying credit card debt or the positive effects if you're saving. The pressure is on to pay off debt and bulk up that emergency fund, especially with talk about a potential recession ahead.

Regardless of where finances stand in this economy, you’re still tasked with keeping up with the rising costs of everyday expenses, like school supplies, groceries and gas, to name a few. If there was ever a critical time to start hunting for deals, discounts and incentives for essential purchases, it’s now. Unless, of course, you won the Mega Million lottery jackpot last month.

This month, you can tap credit cards to work on savings or debt. And you can piggyback on back-to-school discounts and tax-free days to buy stationery, gadgets and other items, whether you have kids or not.

Stack back-to-school savings

Look for every opportunity to save on back-to-school spending. This year, parents with children in elementary through high school plan to spend an average of about $864 on school items, according to an annual survey by the National Retail Federation and Proper Insights & Analytics. The top five shopping destinations include online, department stores, discount retailers, clothing stores and electronics stores.

If you’re shopping at these places, dip into as many savings buckets as possible. If the stars align, you might be able to combine several back–to-school offers to maximize value.

Earn rewards and shop on tax-free days

If it won’t push you into debt, putting back–to-school purchases on a rewards credit card can put money back in your pocket. Some states also participate in tax-free holidays, so you can avoid the sales tax by shopping on eligible days.

Citi® Double Cash Card
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With a credit card like the $0-annual-fee Citi® Double Cash Card – 18 month BT offer which earns a solid rewards rate of 2% on all purchases (1% when you purchase and 1% when you pay it off), rewards can add up, especially if you’re spending several hundred dollars. Or, look for a card in your wallet that perhaps earns elevated rewards in certain categories, like the $0-annual-fee Bank of America® Customized Cash Rewards credit card. It gets 3% cash-back in a category of your choice from a list of six options (including online shopping) and 2% back on grocery stores and wholesale clubs for the first $2,500 spent per quarter in combined categories and 1% after that.

Bank of America® Customized Cash Rewards credit card
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Nerdy tip: When paying off debt, don’t prioritize rewards. You’ll make more progress by not using your credit card and sticking to a budget instead. Look to maximize savings in other areas like tax-free days or retailer discounts.

Shop merchant-specific offers

Most major credit card issuers offer some type of rebate or incentive when you use their credit card to shop with specific merchants. You’ll usually find those offers by logging in to the account or checking your email inbox. American Express, for instance, has AmEx Offers, which issue bonus rewards or a statement credit when you make qualifying purchases with specific retailers. Sometimes seasonal offers are available that offer discounts during tax time, holidays, back-to-school or other occasions.

American Express Blue Cash Everyday Credit Card
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Combined with rewards, you’ll start to tally up the savings. If you have an AmEx card like the $0-annual-fee Blue Cash Everyday® Card from American Express, you can rake in savings on all back-to-school expenses from gas to groceries. It earns 3% back at U.S. supermarkets on up to $6,000 spent per year, 3% back at gas stations on up to $6,000 spent per year, 3% back on U.S. online retail purchases on up to $6,000 spent per year and 1% back on all other purchases. Terms apply. Depending on the offer, you could potentially snag 3% and even more on a U.S. online retail purchase with an eligible merchant. Terms apply.

Add an online shopping platform for triple-dip rewards

You can ratchet up your rewards even more when you start your online shopping by clicking through an online shopping platform. Some portals, like Rakuten, offer cash back on your purchase, while some give airline miles or hotel points.

Let’s say you’re going to make a $75 purchase online. You’ve activated a specific merchant offer on your card, and you shop through an online portal that’s offering 10% cash back. Here’s what your rewards could look like on that purchase, assuming you meet the terms:

  • $15 from the merchant offer added to your card.

  • $7.50 from the 10% cash back portal.

  • $2.25 from your 3% cash-back credit card.

That’s a total of $24.75 back in rewards from that one $75 purchase, not including potential savings from tax-free holidays. This same strategy applied several times to different eligible purchases can go a long way.

Prep your credit cards for the unknown

With rising prices, interest rates hikes on credit cards, and a potential recession, it’s important to set your credit cards up to withstand potential economic changes.

Adjust your budget

If you haven’t already adjusted the budget for fluctuating inflation costs, review your credit card statement for unnecessary purchases and potential wiggle room. Cancel those unused subscriptions or downsize to those that are less expensive, if possible. Making changes now can ensure your finances are in better shape later.

Consider asking for a higher credit limit

Trimming the unnecessary fat can prevent a budget from getting so tight that you’re tempted to rely on credit cards. While it’s important for your financial health to not rely on a credit limit, it can be convenient to have if it floats money in between paychecks to avoid tapping an emergency fund. Whatever the case, if you value a credit limit, it’s wise to request an increase before a potential recession when the account is in good standing.

In the past, issuers have slashed credit limits when the economy is uncertain or in a recession. If you’re approved for a higher limit today, you increase the odds of having more available credit left over if the issuer decides to lower it later. Think of it this way: If an issuer were to slash a current credit limit of $5,000 in half, you would be left with a $2,500 limit.  But, if you had requested a higher credit limit and been approved for $10,000, you could end up with $5,000 if the lender cut it in half. It’s not foolproof, but it’s a strategy.

Having a credit card at a different institution may also help you keep available credit intact if one of your two issuers decides to lower the limit. But, if they both go in for the trim, putting in the request for a credit limit increase now might help to preserve more available credit later. You can try calling the number on the back of your card to ask a representative, or some issuers allow communication by chat or direct message.

Nerdy tip: An issuer may run a “hard inquiry” on your credit after requesting a higher credit limit. Ask what to expect before putting in the request because the process varies by issuer. A hard inquiry can temporarily drop credit scores, so this option may not be ideal if you’re applying for a loan any time soon.

Pay off debt

Wells Fargo Active Cash Card
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Start chipping away at debt while it’s still manageable. With a good FICO score of 690 or higher you might be eligible for a low-interest balance transfer credit card that allows moving high-interest debt from another issuer onto it. A card like the $0-annual-fee Wells Fargo Active Cash® Card offers 0% intro APR on Purchases for 15 months and 0% intro APR on Balance Transfers 15 months from account opening on qualifying balance transfers, and then the ongoing APR of 17.24%, 22.24%, or 27.24% Variable APR. It charges an introductory balance transfer fee of $5 or 3% of the amount transferred, whichever is greater, for 120 days from opening the account (then up to 5%). It’s a lengthy window to make progress on debt.

To view rates and fees of the Blue Cash Everyday® Card from American Express, see this page.

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