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6 Tips to Maximize Credit Card Rewards

, by Kelsey

In the credit card world, there's really no better feeling than earning rewards for your spending. Who doesn't like getting a little bonus for purchasing everyday expenses with some plastic?

But lost in the excitement of air miles, cash back, and gift cards is the fact that getting the most out of your credit card rewards requires some extra know-how and a bit of work. Want to squeeze every last drop of value out of that rewards card? Here are some tips.

  1. Pick a rewards card that matches your lifestyle

Even the best of the best rewards cards will fall short for you if the rewards you're earning are a poor fit. Not much of a traveler? Acquiring airline miles and hotel points won't be of any use. Drive an electric car? A gas rewards card won't do you any good. But if, on the other hand, you take frequent trips or drive a gas guzzler, these cards would be perfect.

When you're on the search for a rewards card, you should be looking for one that matches your spending habits and offers rewards that suit your interests. Track your spending for a month to figure out your biggest expenses, and then apply for a rewards card that gives the highest percentage cash back for the things you spend the most on.

  1. Don't hoard your points

It might sound counterintuitive, but saving up your rewards for a big payday is usually not such a good idea. Sitting on a pile of points doesn't have the advantages of a regular savings account that earns you interest. In fact, your rewards can lose value over time due to inflation and the devaluation of points and air miles.

Rewards programs aren't banks—the best case scenario is that those points and miles you're saving will have the same value when you finally decide to redeem them a year or more down the line. But rewards programs change their award charts all the time. It's more likely that the amount of points needed to redeem a flight or hotel stay will increase over time, making them less valuable the longer you hold onto them.

It's better to just use those points up now before their value drops or they expire.

  1. Keep an eye on reward limits

Pay attention to reward limits when you're shopping around for the best rewards program. Some cards will cap the amount of points you can earn, so it's a good idea to factor the rewards ceiling when comparing cards.

If rewards card A offers 5% cash back on groceries but with an annual cap of $250, then you're only getting rewarded for the first $5,000 you spend. In this case it might be a better option for you to go with rewards card B, which offers 3% cash back on all purchases with an annual cap of $300 (if you already planned on using your card to make $10,000 worth of purchases).

The point is to be realistic about how much you're likely to spend in a year—sometimes for specific categories—and compare that to each card's reward limits.

  1. Don't chase points

Do you have rewards fever? You might want to get that checked out. Earning points and cash back on your everyday purchases is one of the biggest benefits of responsible credit card use, but if the allure of rewards has you spending more than you otherwise would, you're not getting as much value as you might think.

Let's say you spend $500 on average every month on groceries. With a 3% cash-back card, you'd be earning $15 a month—you can even think of that cash back as a discount on your monthly spending.

Enter a spiffy new rewards card: now you're enticed to stuff your fridge and stock your pantry with $50 more worth of groceries every month just because of that sweet, sweet cash reward. But there's a problem. You're earning $1.50 more in rewards, yes, but your uptick in spending is actually costing you $48.50 in extra groceries that you wouldn't normally be buying.

If you're using a rewards card, beware of changes in your spending habits that could be costing you more than the rewards you're earning.

  1. Try not to carry a balance

One of the easiest ways to cancel out the value of credit card rewards is to pay more in interest than what you earn back. Rewards cards generally have higher APRs than regular credit cards, so knowing how to avoid paying interest is especially important if you want to get the most out of them.

This doesn't mean you can't ever carry a balance. Say you're making a major purchase and won't be able to fully pay the balance off for a couple months. Sure, it would be best to not pay any interest at all, but if the rewards you'd earn are greater than the interest you'd accrue, then you're still getting value from using your rewards card.

But if that major purchase ends up taking you a year to fully pay off, then the interest you'd be charged over that period of time will likely be costing you much more than whatever rewards you earned. Again, it's important to be realistic about what you can afford and how long it might take to pay your balances. The rest is easy — just calculate how much interest you'd pay and compare it to the rewards you'd earn to see if using your rewards card is the right choice.

  1. Read the fine print

This applies to any credit card, but rewards cards in particular have unique terms you need to watch out for. Here are a few important ones:

  • Points expiration dates. Not all rewards cards have expiration dates on their points, but you should make sure by checking your card's terms and conditions from time to time.

  • Minimum spends. Some cards have minimum monthly spending requirements where you have to spend a certain amount each month to earn or retain your rewards. And some have spending bonuses where you can earn extra points, miles, cash back, etc., if you meet a minimum spending amount within a set amount of time. Know your cards spending requirements or risk losing out on rewards.

  • Late or missed payments. Those coveted points you've worked so hard to accumulate might be snatched from your grasp if you stumble on your payments. Some credit card companies will penalize you for missed or late payments. If you're late making one month's payment, the points our earned during that month can be forfeited. Plus, payment history is the biggest factor in your FICO® Scores—all the more reason to make payments on time every month.

Maximizing the value of your rewards card requires work. You should be vigilant when it comes to keeping up with your card's terms.

Think you're ready to make the most of a rewards card? Head over to our Savings Center to find one that's right for you!


Equal parts project manager, content marketer, social strategist and writer, Kelsey is a marketing manager at FICO and financial health enthusiast. Focused on making meaningful connections with consumers on their way to financial fitness, Kelsey is always good for a creative tip on how to keep your budget in check.