How to Max Out Credit Card Rewards

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With the price of food and gas where it is, everyone’s looking for an edge and for more and more people, myself included, that edge is in maximizing what you can get out of credit card cash back reward programs. Credit card companies charge vendors a hefty percentage to process credit card transactions (AMEX and Discover charge the most, that’s why they often have the best cashback programs), so doesn’t it make sense that they pass along some of that to you? Of course it does!

So here are eight tips I use to ensure I get the most cash back out of credit cards, hopefully you will find them useful as well.

1. Know Your Spending

Every card is tailored to a slightly different person and a slightly different spending profile. They’re looking to get a slot in your wallet or purse and so they sometimes offer strange groups of eligible cashback categories in order to get there. The best way for you to figure out which card is best for you is to check your budget and see where your spending is.

Unfortunately, gone are the days when supermarket purchases offered 5% cashback but purchases at gas stations and auto maintenance offers are still around. For me, the answer is combining Costco’s cheaper gas with their Costco TrueEarnings card, which offers 1% cash back. You can get Costco gas without a membership in some areas.

Here are some popular categories and the cards I use (if applicable):

There are certainly more cards out there but those are the ones that were ever on my radar given my spending categories.

2. Skip Stuff, Get Cash

I always opt for cash back because it makes the math easier and you can never have “loss” in the conversion. I know some people like to get “stuff” but often times, if you check out the catalogs, the conversion of points to products is never in your benefit.

Let’s take the simplest example of a gift card on the Citi ThankYou network. Each ThankYou reward point is worth approximately a penny, meaning 100 points equals one dollar. If you were to trade in your points for a $5 Barnes & Noble Gift Card (Item 1111022), it would cost you 1,000 points – or $10 worth of points! Of course as you get to larger gift cards, the exchange rate is more favorable ($10 gift cards cost only $15 in points) and it only starts to become even when you reach the $25 gift card level, depending on the vendor. The loss is most obvious with gift cards but it happens with stuff too because you’re often paying retail value in points.

3. Don’t Get A Zillion Cards

In my list above, I mentioned that I didn’t get the AMEX SimplyCash or the Home Advantage card because I didn’t spend a lot there. From time to time I do spend money at Home Depot or Lowes in spurts, as I will soon do to repair drywall damage in the next week or so, but it doesn’t make sense to load down your wallet or purse with a ton of plastic you don’t use regularly.

First, applying for a lot of credit cards will damage your credit score for a little bit. Second, you risk losing track of them if you don’t use them regularly. Maybe you forget to pay a bill or one of the cards falls out when you’re running around, losing track can wipe away an entire year’s cash back in one unfortunate incident. Finally, who wants to carry around all that extra weight anyway?

4. Have Backup

You’ll want at least one card that will give you 1.2% cash back on everything (for the first year, there’s a 20% bonus on top of the normally 1% cash back offer) that you can turn to if you forget whether you can get better cash back rewards on a purchase. Most cards will have at least 1% cash back so finding one will be a cinch. The Citi CashReturns card is our backup 1.2% card because there is no limit (crucial) and they send a check automatically once you reach the $50 threshold. The only way you can do better is if you can find a card that will deduct the cashback right off the credit card statement (the American Express SimplyCash(SM) Business Card will do this) or find one with a higher cash back, which I haven’t seen yet.

5. Beware Low Limits

Discover Card’s Open Road card offers 5% cash back. Ordinarily that would be a screaming hot deal, but read the fine print and you’ll see “Earn a full 5% Cashback Bonus on your first $100 in combined gas and auto maintenance purchases each billing period.” Woah. $100 can’t even fill the tank for some people. So the 5% looks good at first glance but really isn’t that great.

6. Write Down Cashback Percentages

Get some scotch tape and write down all the categories and percentage cash back on the face of the card. Some cards offer rewards in categories you don’t normally spend in, by writing it down you can flip through your cards as you wait in line so you can maximize your rewards. For example, the Discover More card is part of a program where the 5% cashback reward categories change every quarter. There’s no way for you to keep track of what it covers this month because it changes four times a year, so rather than rely on memory, write it down and change it as the program changes.

7. Always Pay In Full

Never carry a balance. Any interest you pay will erase your reward totally and completely.

8. Stop Spending

What!? What kind of tip is this? It’s actually the best tip. 🙂 On some things you can’t simply “stop spending,” like food and gas, but on others you might want to consider putting off the purchase for a few days, weeks, or months until the economic climate recovers a little. Skip that movie once a week or cook dinner more often, those little steps will save you more money than a few percentage points off your bill.

Do you have any tips or tricks to maximize your cash back? If so, please share!

(Photo: andresrueda)

{ 14 comments, please add your thoughts now! }

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14 Responses to “How to Max Out Credit Card Rewards”

  1. Jason says:

    “Each ThankYou reward point is worth approximately a hundredth of a cent, meaning 100 points equals one dollar.”

    A quick math quibble… If each is worth 1/100th of a cent, then it would take 100 to equal $.01, and 10,000 to equal $1.

  2. jim says:

    Good catch, I changed frames of reference midway through that thought, I meant a hundred of a dollar, thanks Jason.

  3. 42 says:

    My Amex Blue Cash has 5% “gas & groceries” but only after you spend about $6500; it’s 1% before that. But I use it for everything anyway so hitting that milestone didn’t take that long. Oh and yeah I pay it off every month 🙂

  4. Emily says:

    I totally second you on the “always pay in full” point. A reward card has zero value if you’re paying interest on it, especially since the APR is higher than that of a low-interest no-frills card. Some reward cards come with an annual fee, too — that in and of itself can wipe out any potential rewards.

  5. Hawkmoon Nine says:

    Costco TrueEarnings card is 3% for gas now (and you don’t just get it for gas at the Costco, any gas purchase qualifies), plus you get 3% back for restaurants and 2% back for travel purchases (1% for everything else). And they have specials, like switching your cell phone payment to your card and get a $10 Costco Cash card. I use the card for most everything, but unfortunately not everyone accepts Amex, so I carry a Citi MC as backup.

  6. Rachel says:

    I love our rewards program. We just make sure we pay the credit card off in full every month and it has worked out great. It is nice having the extra cash or gift cards.

  7. claroconnect says:

    Also, a great first step is to define your financial goals and spending plan. Without that, you won’t know if you are overspending each month. Once you have a plan in place, you can monitor your credit spending each month to determine what was in your budget and what was OUT of your budget.

  8. EN says:


    Not sure if this is of much use, but I applied for the SimplyCash card just before the change from 5% to 3% cashback on gas was announced. I thought of canceling but Amex allowed me to keep the old 5% reward structure for 12 months before they implement the change for me. So for now I’m just using the card to get 5% off gas and it’s working perfectly.

    Side question, since you use the CashReturns card for mostly all of your purchases, what happens when you’re out of your first year and the card reverts back to 1% only. I think practically all cards offer at least 1% so it doesn’t seem very enticing anymore. Were you thinking of changing after the bonus expires?

  9. Patrick says:

    Reward programs on credit cards are awesome. I have the Chase Freedom card that gives me 3% back on gas, grocery and restaurant and 1% on other purchases. It’s great because after you get $200 in rewards, you get a $250 check. Also, great tip #8. You can save tons of money by just not spending rather than spending more money just to get a few rewards dollars on a credit card. Great article Jim.

  10. jim says:

    EN: We’re going to keep the CashReturns because:
    1) There’s no limit, some of the 1% cards have an annual limit.
    2) They send you a check automatically, so you don’t have to request a check.

  11. Kara says:

    I have a rewards Discover card. To get the most from it, I use when placing online orders. That way, I get points through that site while shopping online and through my Discover card.

  12. EN says:

    Thanks for the response Jim!

  13. Mike says:

    If you have an account at Fidelity, I’d recommend applying for a Fidelity platinum plus Visa. No annual fee, 1.5% back on every $1 spent. We put every single purchase we can on this car (of course we pay it off every month) and have made thousands.

    The only downside is you need to initiate the transfer from the rewards program into your fidelity account, but in a way that’s great, because it’s going directly into your investment account.

  14. Raphael says:

    I came across your work today and decided to add a comment. With all due respect, there is one card that do gives 2% cash back. You must accumulate in excess of $25.00 to redeem. The name is Household bank. I closed my account because HSBC bank took over and raised my apr to 14% from 8%. Someone still have a platinum from them with the same feature. There was no limit on my reward earnings. And you can buy anywhere you want at any price. Well, HSBC may had spoiled that too. thanks and good luck.

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