5 ways to maximize your credit card rewards

Want to make the most of your credit card rewards this year? With some basic steps, such as learning the rules of your reward cards, a call to your issuer, and an effort to accumulate your points and miles, you can make the most of your reward program. Whether you are a long-time cardholder or just starting out, following these five tips can help you earn more, save more, and get the value out of your rewards.

1. Know the rules

Knowing the rules of your reward program(s) is key to getting the type of points you need most. Rewards points may be worth a certain value when redeemed for travel but have another value if used for cash back or statement credit. Sometimes you can transfer points to airline or hotel loyalty programs or combine them with someone else’s points. Airline miles might be worth more for international travel bookings, but cheaper for a domestic flight. Knowing the flexibility and various uses for points or miles is key to making the best use of them.

2. Pick the cards that work best for you

If what you want is simplicity, pick a card that earns rewards on every dollar you spend. If you’re comfortable with some additional complexity, select cards that earn higher rewards for specific spending. Cash-back cards offer the easiest redemption options, typically a statement credit that lowers your next credit card bill, or a direct deposit into your bank account. Travel cards offer the benefit of cheaper vacations, but using points and miles requires some longer-term planning. Many cards offer a flat reward (usually 1% of purchases) on all purchases while offering bonus rewards (typically 5% of purchases) on spending at grocery stores, gas stations, restaurants, travel-related, or other specific purchases. These bonus categories typically change every three months, so holding a couple of these types of cards can mean you might get rewarded a 5% discount on one or more of your everyday purchases all year long. You’ll have to sign up for the new categories each quarter, but the card issuers will typically notify you in advance of an upcoming bonus category and provide you with a link to sign up.

3. Take advantage of new card rewards

Some cards offer significant rewards when you spend a significant amount within a prescribed period after opening the account. For example, a card may offer a $200 reward if you spend $3,000 within the first three months you have the card. These new cardholder rewards can range from a few hundred dollars to $1,000 or more in travel. Even if the card carries an annual fee, a hearty reward from a card that also offers healthy, ongoing benefits can outweigh the fee.

4. Explore retention offers

If you have a card that you’re thinking about getting rid of, consider seeking a retention offer rather than ditching it altogether. A retention offer is an incentive that a card issuer may grant you to keep you as a customer. Call your issuer and tell them that you’re thinking about canceling your card. When you do, they will likely offer you any retention offers available. You may be offered a statement credit, bonus points, a lower interest rate, or an annual fee reduction or waiver. However, you should listen to the terms carefully. There may be minimum spending requirements to qualify. If you accept the retention offer, you also may be obligated to keep the card open for another year.

5. Pay your entire card balance

Of course, your credit card rewards are only valuable if you pay the entire balance of your card(s) each month. Otherwise, the interest you pay will likely outweigh your rewards.

We are here to help

Reach out to Scarborough if you would like assistance with evaluating your credit card reward offers. If you are burdened by credit card debt, we can also help you develop a strategy to pay it off while still saving for your financial future.