Maximizing Your Credit Card Rewards

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“009-365” by F Delventhal is licensed under CC-by-2.0 You can save more if you follow the right approach to maximize credit card rewards.

If you are like me, you want to get great, quality merchandise at the lowest possible cost. I love my cash back credit cards, but simply collecting rewards at face value is not maximizing your returns. Learn to maximize credit card rewards by following a methodical process you can apply to every purchase. While some frugal viewpoints advocate against unnecessary spending, it is more important to get the best value out of the money you spend, whether it is considered splurging or not. In fact, some of the highest yielding rewards will come from your discretionary spending.

Best Times to Redeem Credit Card Rewards

Perhaps the best advice to follow when trying to maximize credit card rewards is to consider the best time and place to redeem your rewards. The value you extract from your card is gained in several ways. Naturally, your rewards balance accrues over time with your everyday purchases. Following common sense, use the card with the best cash back ratio for the retailer you are shopping at. You likely already think about which card to use for regular purchases. The real secret to maximizing your rewards builds on the foundation you create when your everyday purchases are made wisely: sometimes it makes sense to NOT select the cheapest store for a larger purchase. Ask yourself these helpful questions, and apply them for every big purchase that you can:

  • Does a higher cash back rate offset a marginally higher cost? Some stores may fall into a different cash back earning tier. You may find a clothing or department store, or perhaps an office supply store is selling the item you want whereas you were looking at only major retailers like Walmart, Target, or Best Buy. Paying the slightly higher price may end up giving you a lower total cost after rewards are factored in.
  • Is there a promotional cash back rate through your card’s shopping portal? Some credit cards offer higher cash back rates for online purchases at specific retailers when made through their shopping portals, such as Shop Discover. Others, like Amex Offers, give you statement credits on offers you add to your card. To maximize credit card rewards, this is a very powerful technique. Cash back bonuses often rotate, so the stores and amounts will vary. Checking regularly for each major purchase will add up! You can apply the first rule to these purchases: When multiple stores sell the same item, a shopping portal cash back rate may offset slightly higher prices. Remember, these bonuses apply on the balance that hits your credit card, so you can stack promotional codes from the retailer that apply to your cart subtotals at checkout.
  • Can you redeem your points for discounted gift cards? By being patient and allowing your rewards points to accrue, you can often hold out for the best conversion value. Rather than opting for a credit on your statement, you can often redeem your points for gift cards at 20% or more off the face value! Price compare for the purchase you are making and compare the end result. These are terrible ideas if you are not already planning to make the purchase – otherwise they encourage increased spending due to the perceived “value” you are getting.
  • Compare the type of stores that sell the same item. More specifically, compare the business model and the range/variety of products they sell. Retailers that sell primarily high-margin items often have 10-25% off coupons or, even better, may have $10 off $25 or similar promotions. They can afford to offer this off any item they sell, whereas stores like Amazon, which sell a variety of items, do not offer discounts or often will not give back more than 5%. Department stores, clothing stores, and specialty retailers can pay off big if they sell the item you want to buy. The best way to maximize credit card rewards is to stack your discounts and compare your alternatives after adjusting prices for rewards. 

Tips to Maximize Credit Card Rewards

Truly there are many ways to justify your spending and to feel like you are getting a great deal. It can be too much work to scrutinize every purchase in pursuit of trying to maximize credit card rewards, but racking up credit card rewards the most efficient way possible on the bulk of your purchases will allow you to use these more advanced techniques.

When it comes time to redeem your rewards on higher-value items, you are already going to be comparison shopping and your higher bill will give you more room to squeeze value. Be patient, and avoid redeeming your rewards balance unless you get more than face value. Don’t let gift cards or deals fuel purchases you weren’t planning on making, and opt for cash back bonuses on shopping portals if they match your discount on the gift card rewards. This will help you to grow your rewards balance while waiting for the prime moment to redeem them.

I hope this technique helps you maximize credit card rewards while being simple enough to reliably use year-round! Its power is highest the more you apply it.

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