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maximise credit card rewards
11 Oct 2019

Shop and Reap the Rewards: How to Make the Most Out of Credit Card Rewards

Rewards credit cards can save you a lot of money.

If you plan well, you could find yourself on a four-continent world tour, flying business or first-class all the way, for less than $1,000.

Getting the most out of your rewards cards takes some planning though. If you’re not strategic about earning points, you likely won’t get across the state, let alone around the world.

A study from the University of Chicago shows that rewards cards are some of the best cards to hold for the long term, and can help you with money management. Let’s look at some ways to maximize credit card rewards.

Choose Rewards That Work for You

The most important factor in choosing a rewards credit card is to choose one that fits your lifestyle and interests. If you don’t like traveling, there’s no point in getting a travel rewards card, no matter how good the deal.

Cash-back rewards cards are universal since the cash can be used toward anything you like in most cases. It’s not only about the rewards, but it’s also about how you earn them. If you get better rewards for shopping with certain merchants or for buying certain types of products, make sure those work for you as well.

Shop Around to Maximize Credit Card Rewards

Before you start shopping with your new card, shop for your new card. Compare the benefits offered by different credit card companies to find the best deal for your needs. Look at features like:

  • How much do you need to spend to earn points?
  • How many points do you need to redeem for products or services?
  • Do all merchants qualify for rewards or do you have to shop with specific ones?
  • How easy is it to redeem your points?
  • Does the card offer bonus points for signing up or transferring a balance from another card?

Check things like the interest rate and annual fees as well. Higher rates aren’t necessarily bad, provided you pay the balance every month. And annual fees are okay too as long as you’re getting more in return than it’s costing you. Just be sure to factor these into your comparison.

What Extra Services Does the Card Offer?

On top of the points you earn, many rewards cards also offer other benefits like concierge services, complimentary access to airport lounges, and extended purchase protection. Make sure you take these into account as well. It’s not only about the points.

Check the Terms

Choosing a rewards card is one time when you should definitely read the fine print. Check the terms and conditions to see any restrictions could limit your use of your points.

While the best travel cards will let you redeem your miles any time, some cards have blackout periods when you can’t use your rewards. These periods are usually during peak travel times so it can limit your options, especially if you’re working around school and work schedules.

Some cards also restrict rewards earned on certain brands or types of products, either by only earning points on certain brands or by excluding certain brands from the reward program.

Focus Your Efforts

It can be tempting to sign up for every reward card that comes your way but doing this will dilute your efforts. Instead of earning a few points on a bunch of different cards, focus on using one or two cards for all your purchases. You’ll earn points much faster and will be more likely to accumulate enough to make it worth your while.

If you get an offer that is better than the card you already use, don’t hesitate to sign up but stop using the old card once you do. You might even get bonus points for transferring any balance you have on your current card.

Focus Your Spending

On top of focusing on one or two cards, focus on putting all your spending on the credit card. Even small day-to-day purchases will add up over weeks and months. You can pay them off immediately if you want to be sure you don’t spend the money before your credit card bill arrives but if you’re spending the money anyway, why not get the points?

You can also use your card to make group purchases. If you’re out for dinner with friends or buying tickets for a group of people to some kind of event, offer to pay with your card and have them give you cash or send you the money by Paypal or Venmo. Again, you can use that money to pay it off immediately but you’ll get the extra points for paying the entire bill.

This can be a challenge if a few people in the group have rewards cards, mind you. Consider sharing the wealth and rotating who pays each time you get together.

Keep Track of Expiry Dates

Most rewards cards have expiry dates on the rewards you earn. It’s usually based on the date earned, so make sure you keep track of those dates. If you’re saving your points for a larger “purchase,” you don’t want to find out the oldest points have dropped off by the time you’re ready.

This is another factor to pay attention to when choosing your rewards card. All else being equal, you’re better off with a card that offers a longer redemption period before the points expire. This might even be worth paying a higher annual fee if it means you can save longer for larger rewards.

Watch for Changes to Terms and Conditions

If you get mail or email from your credit card company with updates to the terms and conditions of your card, makes sure you read them. These terms are usually long and confusing “legalese” but it’s important that you pay attention to any changes in how points are earned.

If you don’t read the terms, you might find yourself earning fewer points, losing points you had saved, or not being able to redeem them the way you expected when the time comes. If the terms change in a way that impacts your rewards, look for a replacement card with better options.

Don’t Go into Debt to Collect Rewards

It should go without saying but going into credit card debt is never a good idea, even to earn extra points. The value of the points you’ll earn by overspending on your credit card will never outpace what you pay in interest on the debt.

If you get an offer for a way to earn extra rewards and you either don’t have the money to spend or wouldn’t have to buy something you do not need, don’t get caught up in the moment. Ignore it and wait for an offer that makes more sense.

Something else will come along before long, whether it’s another special offer or another card that has even better rewards than the one you already have.

Merchant Arbitrage

Arbitrage is the process of buying something at one price and selling it for a higher price immediately or shortly after. You can use this principle with rewards credit cards as well.

If your rewards card offers more points for purchases made at a specific merchant, see if that merchant sells gift cards for other stores that you shop at regularly.

For example, if you have a credit card that gives you a higher cash-back rate on anything you buy from Amazon but you buy all your movies and music from Apple, you could buy iTunes gift cards from Amazon. You would earn the extra points on your credit card and could then use those cards to fund your iTunes account.

Rewards vs. Store Financing

If you’re making a large purchase like new appliances or furniture, stores quite often have special interest-free financing offers. You might be able to buy today but not have to pay for six months or longer, with no interest charges.

Consider these offers carefully, weighing them against the potential reward points you’ll get if you pay up-front with your card. When the interest-free period ends, you may not be able to pay the balance off with your credit card. And even if you can, the terms of your card could change in the meantime.

If the reward points you would get by paying up-front are worth more than the interest you could earn on the money by investing it for the interest-free period, you’re likely better off with the points.

The Bottom Line

The bottom line comes down to choosing the right rewards card for your needs and lifestyle and using it wisely. It won’t matter how well you maximize credit card rewards if you end up with credit card debt that’s racking up a ton of interest.

Choosing the best rewards credit card can be a time-consuming process. Going from one card’s website to the next to compare all the details takes a lot of work. And the more cards you’re comparing, the more challenging it gets.

Let Bonsai Finance do the work for you. We stay up to date with the latest rewards offers from all the major credit cards. Use our comparison tool to find the best credit cards for you and save yourself the hassle.

You can also look through our blog to find helpful articles on installment loans, guaranteed loans, and other bad credit loans. And as always, don’t hesitate to reach out to us to learn more!

Here are some articles from our blog so you can learn about these helpful topics:

What Do You Need to Get a Payday Loan?
A Credit Guide to Using a Credit Card to Buy a Car
What Is the Best Credit Card for Amazon Purchases?
7 Questions to Ask Yourself Before Getting a Cash Advance Loan