How to Make the Most of Rewards Credit Cards

It starts with getting the right one and using it, responsibly, for all purchases. It's also key to know your card's benefits.

Anisha Sekar, Kimberly PalmerSeptember 17, 2020
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Knowing the ins and outs of your rewards credit cards can help you capitalize on all of their benefits. Here are five steps you can take to ensure you're maximizing your credit card rewards.

1. Get the right card

There is no one-size-fits-all credit card: An outstanding product for one person could be a horrendous option for another. Your best bet is to find a rewards program that matches your spending habits.

Avid travelers will benefit from travel cards that pay in points or miles that translate into free flights and hotel stays. But moms and dads might get more use out of a cash-back card like the Blue Cash Preferred® Card from American Express, which earns high cash-back rewards at U.S. supermarkets and U.S. gas stations. If you buy the bulk of your household supplies and groceries at Amazon, then the Amazon Prime Rewards Visa Signature Card could earn you the highest return.

Nerd tip: Rewards cards in general carry higher APRs than non-rewards cards; if you carry a balance month-to-month, then it makes more sense to focus on low-interest credit cards.

2. Charge everything (and pay it back quickly)

You can maximize rewards by charging all your purchases to your credit card. Rewards cards offer either a set number of points/miles or a percentage of cash back on every dollar spent. So the more you charge, the greater your rewards. This doesn't mean spending more money than you have; it means using a rewards credit card for spending that you're already doing anyway.

Paying off your purchases immediately allows you to avoid interest charges. If you don't pay off the balance every month, the interest you pay will eat up any rewards you earned.

3. Use multiple cards

Juggling multiple cards can add a level of complication, but it also makes it easier to maximize rewards.

For example, you might start by using one card for everyday purchases, such as the Citi® Double Cash Card – 18 month BT offer, which offers 2% cash back on all purchases: 1% back when you buy and 1% back when you pay it off. But you could take it further by adding a card like the Chase Freedom Flex℠ into your rotation. It earns 5% cash back on up to $1,500 per quarter in rotating bonus categories (activation is required). All other purchases earn 1% back. In the past, bonus categories have included things like gas stations, drugstores and restaurants.

And you don't have to stop there. For a third option, you could consider a store-specific rewards card that earns you discounts for shopping at your favorite retailer. Or you might opt for a travel rewards card that helps you collect miles. Examine your budget — and your goals — to figure out the combination that works best for you.

4. Remember your bonus categories

There's no need to modify your spending simply to match your credit card rewards categories. However, it doesn't hurt to be cognizant of the categories, especially if you use multiple credit cards. If one of your cards earns 5% at department stores and the others earn only 1%, don't miss out on the higher return rate.

Some cards with rotating rewards categories require you to opt in every quarter if you want to be eligible for accelerated rates, so you might want to set a reminder.

5. Uncover hidden perks

Do you know everything your card can do for you? For example, consumers who hold the Chase Sapphire Preferred® Card get 25% more value when they redeem for travel booked through Chase Ultimate Rewards®. Cardholders of the Delta SkyMiles® Platinum American Express Card save 20% on in-flight meals and entertainment. Terms apply.

Your benefits may also differ depending on what network your card runs on. For instance, Visa and Mastercard tend to offer slightly different side perks, and even within those networks there are several different tiers.

Whether you're applying for a new card or tapping into the hidden power of an old one, check up on the details to take advantage of all the benefits.

Information about the Amazon Prime Rewards Visa Signature Card and the Delta SkyMiles® Platinum American Express Card has been collected independently by NerdWallet and has not been reviewed or provided by the issuers of these cards. 

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