Seven ways to maximize your cash back rewards

Woman buying computer

Cash back rewards credit cards are great for earning immediate rewards for making purchases. Statista reported that in December 2017, 50% of Americans had cash back and rebates on their most-used credit cards. That shouldn’t come as a surprise as most people prefer to save on purchases. While the savings percentages vary, using your card, consistently is key for maximizing its potential.

There are a number of factors that go into choosing the right cash back reward credit card. Here are seven tips to get you started.

The rewarding seven

1)  Cash back for signing-up

Credit cards that give you cash back – usually ranging from less than $100 to more than $1,000 – for just signing up. To take advantage of these perks, you need to meet a credit card’s minimum spend within a certain time period, typically within three months after opening the account and have very good credit.

2)  Cash in on everyday purchases

For everyday purchases, make sure your default credit card is the one earning the highest percentage cash back. There are a number of cards that offer cash back on everything from groceries and fuel, to hotel stays. You might even consider supplementing this card with one that earns maximum rewards on what you spend the most on, like filling up at the gas pump.

3)  Buy something big

Putting large purchases on your cash back card can really add up to significant rewards. Maybe you’re thinking about buying a scooter to get around town, or paying your tuition. 

However, consider that if you can’t pay back the full amount by the due date, you will incur interest. So, while buying something big rewards you with a hefty amount of cash back, make sure to pay off your credit card balance at the end of the month.

4)  Consider annual-fee cards

While it may seem like paying an annual fee would cancel out any cash back you earn with your card, there are additional perks that can be worth the extra expense upfront. This is especially true if you spend large amounts in bonus categories. All it takes is a bit of calculating to decide if an annual fee justifies the cash back rewards.

5)  Choose a card that fits your lifestyle

You may want a card that offers rewards on hotel stays, or cash back on groceries, fuel or on retail purchases. There are enough card options available to find one that rewards you for making your favorite purchases. 

6)  Pick the right specialty card

If you’re a business person or world traveler who is most interested in earning cash back on a particular airline or hotel stay, choose your card accordingly. Igor Mitic, a financial advisor from fortunly.com says “Flyer miles, which suit most people who travel a lot, work similar to reward cards in that points are made to be spent on flights, lounges and business and first-class seat upgrades.”

What’s key is finding a card that pays more than 2% in one or two categories where you spend the most.

7)  Pay your bills with your card

One of the easiest and most convenient ways to pay your bills is by using your cash back rewards credit card. This also gives you a way to track where your money is going in one place – your credit card statement. Most companies, like cell phone companies, internet and TV subscription brands, utilities, car payments and health insurance companies all allow you to pay bills via cash back cards.

One final note before you start earning

Cash back rewards credit cards are ideal for purchases, air miles or just straight-up cash back. Be sure to not only choose a competitive card, but also strategize how you can maximize its value according to your lifestyle. This includes paying off your balance on-time every month so that your card can truly work in your favor.