5 tips for maximizing credit card rewards

Start by picking the best rewards credit card for your lifestyle and spending habits.

Key takeaways

  • Choose a credit card that's right for you, based on your lifestyle and spending habits. If the card fits, your points will be easier to earn.
  • Use your rewards credit card for your recurring monthly bills. Amass points and rewards by using your card for things you have to pay for anyway.
  • Double-dip your rewards by enrolling your credit card to merchant-based or loyalty-based reward programs to earn even more points and rewards.
  • Pay off your balance in full every month to avoid paying interest.

Credit card companies have raised the bar on rewards over the years. You can earn airline miles, points to put toward purchases or travel, or you could even get your rewards in cash. Just using a specific card could help you get priority seating at events or access to VIP lounges in airports.

Before you can start racking up points, miles, or cash back, you'll have to find a credit card, or even multiple cards, that offer the rewards you want.

How to find the best rewards credit card for you

Check your credit score. The first consideration starts with you—your credit score. Banks offer their best deals to consumers with the best credit scores. Don't give up if your credit could be better; there are rewards cards for a range of credit scores. In general, "good" credit scores are considered to be over 690.1 So find out where you stand and then take steps to find the cards that would work for you.

You may want to consider fees. Some high-end rewards cards charge high-end fees. Even some less-than-luxurious cards can charge fees. Be aware of how much you're paying and make sure the rewards and perks of the card are worth the cost.

Some cards offer perks beyond points, miles, or cash. Things like access to airport lounges, purchase protection, or car rental insurance may sway you to reach for one credit card over another. If you already have a couple of cards, you may be entitled to some perks you aren't yet taking advantage of.

Consider sign-up bonuses. You may get a windfall of rewards just for signing up for a credit card. But some cards attach a hefty spending requirement to the initial bonus. Make sure you have enough expenses to reach the threshold; otherwise there may be more appropriate cards out there.

Some reward cards are more generous than others. When looking for cash-back cards, consider those that pay at least 2% in 1 or 2 categories, or better yet, on every purchase. Ideally, a card would pay at least 1.5% on every purchase—1% is the industry standard. Some cards pay as much as 5% in limited spending categories or they rotate the spending categories that pay off.

"When selecting a rewards card, look at how their rewards are structured and factor the decision into your spending habits to ensure you're choosing a card right for you," says Stefan Ross, vice president of credit card products at Fidelity.

5 tips for maximizing credit card rewards

  1. Spend on your card to help reach your savings goals. Add to your savings by having cash-back rewards automatically deposited into a checking or savings account, or even into an IRA, brokerage, or 529 savings account—if your financial institution permits it. That way, your credit card purchases can help you accomplish other financial goals.
  2. Charge everyday purchases. "In order to maximize your return on spending, it's essential that you put as much of your daily spending as possible on a rewards-earning credit card," says Ross. When you use a card that offers 2% back on every eligible purchase, it can pay off.

    Expenses Monthly purchases Points earned
    Groceries $800 1,600
    Dining/entertainment $450 900
    Utilities/cable $400 800
    Gas $300 600
    Other expenses $550 1,100
    Totals $2,500 5,000
    2% earns you $50 cash back on $2,500 monthly spend
    This illustration shows how much you could hypothetically earn with 2% back on purchases.
  3. Use your card for recurring payments. Use your rewards credit card to pay recurring bills like utilities or subscriptions to streaming services. This strategy can help accelerate the rate at which you earn points, but you can also get rewarded for spending on things you have to pay anyway.
  4. Use your credit card at stores that offer loyalty points or rewards. That way you're earning credit card points and merchant credits at the same time. Don't forget to look at preferred partners (often found on the credit card's point redemption site). You'll often have bonus offers if you choose to spend your rewards on already set partners.
  5. Pay off your bill in full each month. All your rewards could be spent on interest if you don't pay your bill in full each month. Try to avoid carrying a balance from month to month so that you can enjoy the full benefits of your rewards card—for free.

Get rewarded for spending

There are some impressive reward-maximizers out there who have found ways to work the system to their benefit.2 You don't have to take it to an extreme, though, to make it worth your while. Consider using a rewards card for daily spending and use it to pay bills and recurring expenses. If you pay off your bill each month, you can turn the tables on credit card companies. Instead of paying them to borrow money, they can pay you for spending on their card.

Next steps to consider

Get personalized next steps toward your goals.

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1. Bev O'Shea, Credit score ranges: How do you compare?, NerdWallet.com, December 4, 2018
2. AnnaMaria Andriotis, Emily Glazer, Rewards credit cards gained a fanatic following—now banks are pulling back, Wall Street Journal, January 1, 2019
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