How to Make the Most of Your Credit Card Rewards

Sep 18, 2020

Reading time: 7 Minutes

By guest blogger and Medi-Share member, Philip "PT" Taylor 


Credit cards aren’t all bad. They come with some valuable perks if you use them right. Taking advantage of credit cards (responsibly) can not only be a convenience to you, but they can also give you financial benefits like cash back and travel benefits.


Taking the time to understand some of the best practices can help you make the most of your credit card rewards. Choosing the right cards for you and managing the reward programs well could make you several hundred dollars every year.


Here are some tips to learn how to make the most of your credit card rewards.


1. Understand the Rewards You Will Earn

Maintaining a baseline understanding of the credit cards you have and the benefits they give you is crucial. Knowing what you will get out of a credit card helps you create a strategy for how to best use your credit cards. To get the most out of your reward cards, you need to know which card will reap the most reward for the type of spending you are doing.


Due to the impacts of COVID-19, credit card reward programs are adjusting to new spending. With everyone staying home, eating out less, and shopping online more, credit card companies add or change benefits frequently. For example, right now, you may get higher cash back for grocery shopping versus travel. Staying up-to-date on your card programs is crucial to get the most out of your credit card rewards.


The credit card company’s website is the easiest way to get the latest updates on rewards. It’s a hub of information on the ways to get more value out of your card. Companies will often give gift cards or travel purchase discounts when they are done through their portal.


person paying with credit card


2. Know Your Spending Habits

Being honest about the type of spender you are is a smart move when it comes to card rewards. Your spending habits can help you determine the best credit card offer for you and your lifestyle.


Here are a few questions to ask yourself before you make a rewards card commitment:


  • How often do you travel?
  • How frequently do you fly or have hotel stays?
  • Do you commute and have higher gas spending?
  • Do you eat out a lot?
  • Do you use a particular airline or grocery store?
  • Do you shop on Amazon a lot?


Asking yourself these questions helps you pick a rewards card that is right for you. The questions also help you determine reward cards that you will receive the most benefit from. If you don’t travel often, then a travel reward card might not be as beneficial to you as a reward card for gas.


Be mindful of your changing spending habits with the pandemic. Think about the rewards you would get the most financial benefit out of. With social distancing, you may not be commuting to work but are now spending more on groceries so you could use more cash back.


3. Do Not Carry a Balance

Rule number one of credit card use is: Don’t carry a balance on your card. Every month, you should pay your credit card balance in full.


Carrying a credit card balance means you are living beyond your means. You are spending more money than you make in a month. When you have a balance on your credit card, it means you will be charged interest. And paying interest on the balance could make the rewards you earn all for not.


There may be situations where you need to charge out of the ordinary expenses on your credit card. But don’t make it a habit and have a plan to pay it back quickly. If you don’t pay your credit card balance off every month, you will go into debt.


4. Don’t Spend Money for the Rewards Alone

Remember this, getting the most out of your credit card rewards does not mean you should run up credit card debt just for the rewards. That will only cause you financial problems later. Spending more may get you more rewards, but you still have to pay the bills.


Instead of spending just to spend, use your cards for purchases you were already going to make like groceries, gas, or a planned vacation. You want to get points or cash back for the money you already spend, not create expenses you can’t pay so that you can earn rewards.


happy black woman in city


5. Avoid Cards with Annual Fees at First

Some credit cards come with a big annual fee. It would be best if you considered the benefit compared to the cost. Can you afford the fee? Are you willing to pay for the privilege of using that card? For some of us, the cost won’t be worth it.


There are a lot of fish in the sea when it comes to credit cards. And a lot of them do not charge a fee. Generally, you should avoid opening up one that charges a yearly fee unless you know for sure the rewards are greater than the expense.


The best way to determine that is to do the math. Calculate your yearly spending, figure out the percentage you’d earn in rewards, and compare the two. In some cases, the perks of a particular card might be worth the added cost. Before you pick a card with an annual fee, do your homework to figure out if it’s right for you.


6. Redeem Rewards Wisely

The final way to get the most out of credit card rewards is to know when and how to redeem your rewards. It’s going to require some homework, but it’s worth it to get the biggest benefit. Read the rewards information your credit card company provides to learn how they distribute them.


Many companies use a tiered system which pays a higher reward percentage when you reach a higher level. That means if you redeem your points too soon, the rewards will be worth less of a benefit. The key is to wait to redeem until you can receive the maximum reward.


Pay close attention to the expiration date of your points. Building up your points only to have them expire before you redeem them would waste your benefits.


Often, reward cards will have limited time offers. Now more than ever, you must pay close attention to them. Because of the pandemic, credit card companies want you to spend more, so they are offering more and more benefits. For example, because of the pandemic in some cases, you can get 6% cash back for shopping at supermarkets versus a normal rate of 1% for grocery spending. Some limited-time deals that are 5 to 10 times the points for streaming and food delivery services.


All the different rewards cards can be overwhelming. If you want to keep it simple, use a basic cash-back rewards card. They are best if you don’t spend a lot in one specific category, like travel.


Once you start adding multiple cards to your wallet, it’s a good idea to organize them using a spreadsheet. This will help you stay on top of your points expiration, annual fees, and other important features.


Bottom Line

Credit cards can give you a financial advantage when they are used correctly. To get the maximum benefit, remember to understand the various programs, spend wisely, and know how to redeem the rewards to get the most out of them. And be ready to pivot. With the pandemic, things are continually changing. To stay on top of your benefits, use the company's website as a resource to get the latest information for your specific reward cards.



Part-time Money Philip Taylor

Hi, I’m Philip Taylor (aka “PT”), CPA, blogger, and CEO of FinCon.

Starting a side hustle led to amazing changes in my life.

The expert team and I use to share our passion for business, personal finance, investing, real estate, and more.

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