4 tips for maximizing credit card rewards

Here's how you can maximize credit card perks this year.

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Credit cards are more than convenient. In some cases, they can put serious money in our pockets. In fact, the right rewards card could leave you with more cash back and spending flexibility—but only if you're smart about maximizing those perks. Here's how to do so in the coming year.

1. Choose the right sign-up bonuses

Sign-up bonuses give you money back just for charging a certain amount on a new credit card within a few months of opening it. While you may be eager to claim as many of those bonuses as you can next year, it's a good idea to exercise some restraint. Signing up for too many new credit cards within a short time frame can hurt your credit score, so you'll need to limit your credit card applications, which also means you'll need to choose your sign-up bonuses wisely.

Your best bet is to create a spreadsheet listing the various offers you're interested in and compare them. Keep in mind that one credit card may offer a more generous sign-up bonus than another, but only at higher spending thresholds, so pay attention to all of the details when evaluating your choices.

2. Apply for new cards at the right time

You're only given a certain window of time to snag a sign-up bonus (often three months, but sometimes less), so if you're going to apply for a rewards card that offers one, do so at the right time. Say you're looking at a card that offers the equivalent of $500 cash back for making $3,000 worth of purchases within three months of opening that account. If you know you're planning to travel to see family, or you're furnishing your living room at a certain point during the year, applying for that card right before your planned spending is a good idea.

Remember, you don't want to rack up credit card charges just to snag sign-up bonuses, because then you're not really gaining anything—you're actually spending money to get less back. The key, rather, is to time those applications with big upcoming purchases to make those bonuses worthwhile.

3. Track bonus categories

It's common for rewards cards to offer bonus points in rotating categories throughout the year. For example, one card may give you extra cash back on department stores purchases for one quarter, extra cash back on entertainment in another quarter, and so forth. Tracking categories for a single credit card isn't too tricky, but if you have multiple rewards cards, it can be difficult. A good bet, therefore, is to get organized.

Once again, bust out a spreadsheet and mark down when each card of yours is offering different bonus points. That way, you'll know when to use each one strategically.

4. Don't focus on gas

Many credit cards offer extra cash back for fuel purchases, and since gas is a common expense, that's an easy perk to capitalize on. But right now, a lot of people are working remotely due to the coronavirus pandemic and will likely continue. So, if you're working from home and are going to apply for a new rewards card, don't put too heavy an emphasis on the cash back you'll get for gas purchases. Chances are, you won't be spending too much in that category if you're a remote employee. Rather, you may want to focus on cards that offer bonus points for groceries—because even during a pandemic, everyone needs to eat.

Accumulating a pile of credit card rewards could help your finances in the coming year, not to mention give you more bonus cash to enjoy. Employ these tips so you can make the most of your reward opportunities over the next 12 months.

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