How to Maximize Rewards on a Cash Back Card
For many people looking to earn rewards, cash back is king. Cash-back rewards cards give you the most basic currency available – cash – to spend as you like. According to research, cash-back cards are nearly three times more popular than airline rewards or hotel rewards programs. Cash back credit cards are a great way to earn money from purchases that you would make anyway. This type of reward card can be a great option if you are able to keep your balances paid down.
Learn how to use a cash back card effectively.
Read the fine print. Cards with annual fees and higher interest rates should be evaluated carefully to see if they are worth keeping. Look for the best overall offer.
Run your spending through one card. Try to put as much of your spending on your primary rewards card as possible to maximize the rewards program value. It’s not going to do you much good to have a great rewards card if you don’t use it. Of course, you don’t want to spend money you don’t have just to get rewards, but if you typically do put certain expenses on your card, put those on the rewards card first. That way you’ll get the most bang for your spending buck as possible in the form of your preferred reward. To keep your card balance and budget under control, you may want to make weekly card payments online to avoid having to face a surprise at the end of each billing cycle.
Use store credit to keep your points. If you have to return a purchase made with your cash back credit card, consider getting store credit for your return rather than a credit back to your card. This will allow you to keep the points that you earned on the purchase. However, don’t pursue this option if you don’t shop at the same store frequently and will not use the store credit.
Look for signup bonuses. Some cards offer a points bonus or a cash reward if you spend a certain amount in an initial period. Look for a card with a signup bonus that you can earn using your regular spending habits. Just make sure that you’re not overspending to reach the required number of points – that would defeat the purpose of earning a bonus.
Identify all recurring bills you can pay with a credit card. These bills might include gas, electric, cable, and telephone bills. Enroll the cash back card for automatic payments to these bills if possible. If you choose not to, set aside one or two days every month to pay your bills with the card. Doing so will help you remember to pay these bills.
Pay off your balance each month. Interest expenses can quickly eat into your returns from your cash back rewards. To avoid running up a huge credit card bill and incurring lots of interest, record your cash back card purchases in your checkbook ledger and pay the credit card in full every month.
Tip: If you don’t want to keep your credit card records mixed in with your check records, maintain a separate ledger for your credit card purchases. Start the ledger balance out with the budget for what you can afford to pay on the next credit card statement, then deduct from that amount with every purchase you make.