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Make the Most of Rewards Credit Cards

July 10, 2013
Credit Cards, Rewards Credit Cards
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Aw Nerds!

This article is out of date and the terms and conditions of certain cards may no longer apply. See our Best Rewards Cards page for the most current information.

Using your rewards credit cards to their greatest potential isn’t difficult. The key is education. Knowledge is power–spending power, in this case. Knowing the ins and outs of your rewards credit cards will guarantee you don’t miss out on any of your well-deserved benefits. Here are 5 simple steps you can take to ensure you’re taking maximizing your credit card rewards.

1. Get the right card.

First and foremost, you need a good card. This isn’t as simple as it sounds. What may be an outstanding product for one person may be a horrendous option for another. There is no one-size-fits-all credit card. Find a rewards program that matches your spending habits. It’s silly to sign up for a credit card that has no relevancy to your life, even if it promises the highest return rate on the market. Avid travelers will benefit from cards that pay in free flights and hotel stays. Moms and dads might get more use out of a card like the American Express Blue Cash Preferred, which earns high cash-back rewards at supermarkets and gas stations.

Your best bet is to stay broad. Cards branded by a specific company (retail stores, airlines, hotel chains, etc.) tend to be rather limiting. Sure, you might shop a lot at Kohl’s, but you’ll probably earn much more with a card that earns high rewards at a variety of establishments.

2. Charge everything.

To maximize rewards, charge all purchases to your credit card. Most cards offer a percentage back on every dollar spent, so the more you charge, the greater your rewards. This doesn’t mean spend more–don’t fall into that trap. We’re simply suggesting making your primary payment method credit and paying off all purchases immediately 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.

It’s good to have a main go-to card you use for most purchases. Not only does it make life easier, but you can redeem for bigger reward options sooner if the bulk of your earnings are invested in a single program. However, you might want to consider getting one or two additional cards to supplement your earnings. If, for example, your primary card is the Capital One Venture, you earn a flat 2% back on all purchases. That’s a phenomenal rate. But if you also pick up a no-fee card like the Chase Freedom, you can earn 5% back in specific categories, such as gas, drugstores and restaurants. The bonus categories usually change every three months. Yes, this divides your rewards between two programs, but it’s the best way to lock in the highest rates over the broadest range of purchases.

4. Remember your bonus categories.

You should not modify your spending to match your credit card rewards categories. That’s absurd. However, it doesn’t hurt to be cognizant of your rewards categories, especially if you use multiple credit cards. If one of your cards earns 5% at the movie theater and the others only earn 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. It’s a bit annoying, but they usually make it very easy to do and send plenty of reminders. Don’t forget to opt in or you’ll miss out on extra cash back.

5. Uncover hidden perks.

This boils down to knowing your credit card. Do you know everything your card can do for you? For example, consumers who hold the Chase Sapphire Preferred earn 20% more points 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. If you have a Visa Signature card, you get a whole host of extra perks like hotel room upgrades and rental car discounts. Whether you’re applying for a new card or tapping into the hidden power of an old one, thoroughly research the details and take advantage of all the benefits.