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How to Get The Most Out of Credit Card Rewards

September 8th, 2013 by in Finance with 238 Views

How about receiving 2% or more off on every purchase you make? This is an example offer to credit card users in the form of rewards. Those who have experienced credit card rewards will tell you that there are dozens of competing products depending on the kind of card you own. So, how do you choose the credit card to go with?


Choosing a credit card to go with is not simple, but there is a way that can help you receive the most value in return for your credit card spending.

First, let us know who should earn credit card rewards. Remember that credit card rewards are not for everyone taking into consideration that those who carry a balance should not use a reward card since cardholders with a balance lose the opportunity to receive the lower interest rates offered on non-reward cards, that is, on best low APR credit cards. Savings from lower interest rates far exceed the value of any cash back, miles or points, do you get the point?

Therefore it is best to ignore rewards altogether if you fall in this bracket. Also people struggling with credit card debt are discouraged from spending more in order to earn rewards.

Looking at travel rewards credit card, the ideal user is a person who pays their balance in full every month and likes to travel. A travel reward card user doesn’t have to travel much to take advantage of the opportunities offered by this card since many of them earn points and miles throughout the year, and they don’t utilize these points often. People who travel a lot for work or leisure will benefit greatly and quickly earn rewards to experience repeated, frequent travel benefits.

Evaluating cash back rewards

Once you find out that you can save money from using reward cards, your goal now will be to maximize the value you receive for each dollar spent. You can start with a simple cash back credit card that return a fixed percentage for every dollar spent or use a card that offers different rates of return for spending at various categories of merchants.

For example, TrueEarnings Card from American Express or Costco offers additional cash back on gasoline purchases, besides the cash back received for other purchases. The Chase Freedom Card offers cash back bonuses for purchase in spending categories that rotate every few months.

Using multiple cards

You may opt to use multiple cards so that you can use the one with the highest current rate of return at any particular merchant.

This strategy will work well but you will become overwhelmed along the way by the complexity of carrying many different cards for different uses. It is therefore recommended that you carry not more than four cards that return the highest cash back for the type of purchase you make.

Redeeming rewards

When it comes to receiving the bonuses earned, it seems you might have to choose between various means of receiving the bonuses since some cards offer a statement credit each month, while other mail the a cardholder gift card.

Furthermore, Costco True Earnings Card customers have to wait until February of each year to receive a voucher redeemable at Costco branch for cash or merchandise. Beware that if a customer’s account is not open and in good standing at that time, all rewards are forfeited.

  • Michael Flash

    Some other good credit cards to have…

    Lowes Credit Card, save 5% everyday on everything!
    Target Credit Card, save 5% everyday on everything!

    I would always recommend to sign up for store credit cards, I know they are a pain but most stores you save a good percentage, especially if you shop there a lot.

  • Jessica

    Thanks for all the great tips! I’ve always wondered how credit card reward programs work since my card doesn’t offer it.

    Doesn’t your credit score go down though with the more open credit cards-in regards to all the store cards?

    • Michael Flash

      It will affect your ability to obtain new credit since when you apply for new cards it will factor in your current liability of how much available credit you currently have.

      However, if you pay all your store cards on time it will do more good than harm.

  • Sakil Hossen

    Well I’ve never taken any advantage using my credit cards. Thing is I’m very new user of my Master Card and looking forward to follow up above suggested ways to get the most out of my credit card. Thanks.

  • MD Golam Rabbani

    I am using credit card from 2010 but can’t take the advantage from it. From this article a learn how to use credit card to get reward. Hope now I can utilize my credit card most to get reward.

  • liz soliven

    I haven’t use a credit card yet but I use debit card instead, but I believe I will someday when I get to a bigger company and find a stable job :) Will make this as a reference in the future