Everyone loves earning credit card rewards. Depending on the card, you can get free travel, cash back, gift cards, statement credits, and more. But most people aren't taking full advantage of the rewards that are available to them. If you want to maximize your rewards-earning potential, here are a few tips to get you started.
Choose the right card
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Think about where you spend money most often and what kind of rewards you're interested in. Choose a card that aligns with these goals. A cash-back card is the most versatile option for most people because you can use it anywhere, and there's a variety of reward redemption options.
These cards fall into two basic types. The first offers a flat rate -- usually 1.5% to 2% on all purchases -- or a higher rate on certain expenses like dining all year round with no caps on how much you can earn. The second type employs rotating categories, which often give you 5% cash back on select purchases up to a certain dollar amount (for example, on the first $1,500 you spend in that category) and 1% back on all other purchases.
Both types of cards have their merits, and it's up to you to figure out which type is right for you. Try to estimate how much you purchase with your credit card each year and figure out how much that would earn you with a flat-rate cash-back card and then compare that to a card that has rotating categories that fit in with your shopping habits. Keep in mind that if you go with a rotating-category card, you'll likely have to enroll in the new category each quarter to earn the 5% back. Otherwise, you'll be limited to the standard 1% back.
Get the sign-up bonus
Many rewards credit cards offer a special bonus to those who spend a certain amount within the first three months of opening the account. This bonus often far outstrips the typical rewards-earning rate, so it's usually worth pursuing. However, you should evaluate the feasibility of reaching the spending requirement in the allotted time frame before you sign up for the card.
Look at how much money you normally charge to your credit card in three months. If you'd have to make a significant change in order to meet the sign-up bonus requirements, it may not be worth it. After all, you don't want to put yourself in a position in which you spend too much and you're struggling to pay your balance in full at the end of the month -- and it's essential to get that full balance paid, because if you don't, interest charges will typically outweigh any rewards the card gives you.
If you don't think you'll get the sign-up bonus, you'll have to judge the card by its ongoing rewards to decide if it deserves a place in your wallet.
Take advantage of online shopping portals
Many credit card issuers have online shopping portals that contain affiliate links to partner websites. Before you make any purchases online, it's a good idea to check out whether your credit card issuer partners with that store. If you use the issuer's affiliate link to make the purchase, they will often reward you with bonus cash back or points rather than the standard rate you would normally get.
In order to get these bonus points, you must go to your card issuer's website and navigate to the shopping portal. Then click on the link to the store website that you want to go to and then browse the site and make your purchases with your credit card as you normally would.
Use your card often, but don't go overboard
The easiest way to maximize your credit card rewards is to use your card often on your everyday purchases. But it's important to be careful with this strategy. You shouldn't spend more than you can afford to pay back at the end of the month; otherwise you'll end up carrying a balance. The amount you'll end up paying in interest can negate most or all of the rewards that you earned, and it could take you several months to get out of debt.
You also want to avoid using too much of your credit, as this can lower your credit score. Ideally, you should only use about 30% or less of your allotted credit limit. If that doesn't give you a lot to spend, consider applying for a credit-limit increase.
Following these four tips will go a long way toward increasing your credit card rewards, but it's important not to get so focused on what you're earning that you forget to pay attention to what you owe at the end of the month.
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