Maximizing cash back with your credit card begins by finding cards tailored specifically to your spending patterns. Combine a flat-rate card with one offering bonus categories in order to increase earnings potential and optimize earnings potential.
Always pay your balance off monthly to avoid interest charges that could quickly reduce rewards and accrue. Also consider purchasing through your card issuer’s shopping portal as this can often offer additional cash back offers at certain retailers.
1. Look for tiered rewards.
Cash-back credit cards provide an easier and simpler way of earning rewards than miles/points cards do, offering a percentage back on every purchase you make (though you must clear off your balance first to receive this full amount).
Combine two credit cards that provide flat-rate rewards with ones offering enhanced rewards in specific categories to increase earnings. This strategy, known as the “Island Approach,” makes tracking rewards easier – for instance, the Citi(r) Double Cash Card gives 2% back on gas and restaurant purchases while another card, such as Chase Freedom Flex(sm) Card can earn you up to 5% in rotating categories like restaurants, grocery stores and drugstores each quarter.
Juggling multiple cards requires extra work and care, including monitoring each one for earning and spending opportunities, paying your statement balance in full each billing cycle to avoid interest charges, and remembering to set it and forget it using flat-rate cards which offer predictable interest charges over time. While this approach might sound appealing to some consumers, be mindful that each card’s benefits must be balanced against its associated costs and time requirements before choosing which card best fits you.
2. Look for a flat-rate card.
Your ideal credit card depends on your spending habits. If you tend to overspend on certain categories such as gasoline and groceries, look for cards offering higher percentages of cash back for these expenses.
Alternatively, if you prefer keeping rewards simple and straightforward, a flat-rate card could be the right fit for you. These cards typically offer rewards of 2% or more on all purchases without any tiers or caps or limits to worry about. Nevertheless, if many of your categories overlap significantly then perhaps a card with increased rewards in specific categories may be better suited.
Consider how you’ll redeem your rewards. Many credit cards allow for redemption options such as statement credits, checks, deposits into savings/investment accounts or discounted travel packages; others may limit these possibilities or only provide one or two options.
Once you’ve narrowed down your card options, it’s time to compare. NerdWallet’s compare cards tool makes this task easy: simply input your spending, filter by card type and rate you desire and adjust sliders until your top choices stack up against one another in terms of Genius Rating, annual fee, welcome bonus or other features; finally you’ll know which will provide the greatest monetary value over three years.
3. Look for a store card.
Store cards offer attractive benefits like exclusive sale access, coupons and rewards as well as special financing on large purchases. Furthermore, they may be an easy way into the credit world – they tend to be easier for newcomers with little or no credit history to qualify than conventional cards.
Be mindful that store cards serve a dual purpose: data collection and customer acquisition. By tracking cardholder spending patterns, stores may gain insight into potential purchases that might increase sales.
Store credit cards may only be used at specific retailer locations or affiliated locations, unlike network logo cards such as Visa or MasterCard that can be used at various merchants. When choosing your store card, be sure to select an issuer where you regularly shop so that the payments won’t become an overwhelming burden.
Credit card applications often cause a temporary decrease in your score as the card issuer pulls your credit. But, with responsible use and paying off balances in full each month, your utilization ratio may gradually improve and help boost your creditworthiness over time. Be sure to look up answers to frequently asked questions about store cards before applying.
4. Look for a bonus category card.
An incentive-based card can be an invaluable addition to your wallet, especially if the categories in which you spend frequently. Some cards like Discover It Card offer up to 5% cash back each quarter on certain categories – it’s essential that your choice align with your spending habits for optimal returns; CreditMatch(tm) service from Experian can assist in helping find cards that make the most sense for you and your spending patterns.
If you want to maximize your earnings, pairing cards that reward specific categories with cards that provide higher rates on others can help maximize earnings. For instance, pairing rotating bonus category cards like Capital One SavorOne Cash Rewards Credit Card could maximize earnings.
But it is essential to remember that cash back earned on bonus categories doesn’t just magically appear; activation must occur every quarter if you want the maximum rewards. Some card issuers will notify you when categories become active while others may require you to monitor your statement or use an app like Mint to track spending.
Remember, too, that 5% category caps apply per calendar year – therefore to maximize earnings you must actively take part in each quarter’s rewards categories to maximise earning potential. If activating and tracking bonus categories seems time consuming or burdensome to manage for you, consider switching to a card with all purchases being rewarded equally instead.
5. Look for a travel card.
Travel cards offer frequent travelers or those planning an occasional adventure the opportunity to maximize rewards rates on travel-related purchases and include benefits such as airline or hotel loyalty program membership, Global Entry/TSA PreCheck credits, CLEAR benefits and statement credit to offset annual fees. Plus, many come with generous signup bonuses and waived introductory APRs!
Before purchasing a travel card, ensure you fully comprehend your spending patterns and the potential value of frequent flier miles and hotel points versus cash back rewards. Also know whether these programs are tiered or flat so that you can easily identify which categories can net the highest point accumulations.
Travel cards typically offer more complex rewards structures than flat-rate or bonus category cards, yet there are numerous options to consider when finding the ideal card for you. To select the appropriate travel card for you, start by creating a budget through either pen and paper or an app like Mint or spending manager to track monthly spending categories like food, gas, utilities and entertainment – then find one with rewards in these areas that gives back as much as possible in return. No matter which card you pick, try and pay off any balance every month in order to reduce debt while improving credit scores.
6. Look for a cash-back app.
There are various cash back apps that offer additional rewards on credit card purchases. Most require you to scan a receipt to see whether an eligible purchase qualifies, while other allow you to link your card directly into the app so eligible purchases are automatically tracked and rewarded – this method is used by RebatesMe and Rakuten (formerly Ebates).
Find the appropriate cash-back app by understanding which types of spending you do most regularly – this will allow you to narrow your search down to ones that reward these types of purchases without disrupting your routine too much; examples could be grocery store shopping, gas purchases and online purchases.
Most of the best cash-back apps provide multiple methods for redeeming earnings, including PayPal deposits and gift cards. Some may impose minimum redemption thresholds; it is therefore essential to select those apps which make meeting them straightforward.
Some of the best cash-back apps are free to download and use, while others require either a monthly subscription fee or one-time fee to access. To maximize rewards in terms of minimum redemption amounts and categories spent most frequently on, it is ideal to find an app with low minimum redemption amounts that offers generous rewards in accordance with how frequently you shop in those categories.