Welcome to the wild world of credit card rewards, a place where terms like “churning” and “mileage runs” are a regular part of the conversation. It’s not for the faint of heart, the disorganized or the undisciplined.
However, if you get a kick out of strategy games, you might enjoy it.
The basics of gaming the credit card rewards system are below, but this article is not the final word on the subject. Entire blogs — such as The Points Guy and Million Mile Secrets — are dedicated to rewards.
What’s more, you should NOT try these strategies unless you’re able to pay off your credit card bill each month on time. Paying interest negates your rewards, and carrying a balance is a good way to dig yourself into a financial hole.
But if you are responsible with your spending, the credit card rewards game can be lucrative. Ready to learn more about winning the game? Here we go.
Find the cards with the best rewards
First, you need to find the right rewards credit card. In the past, rewards cards were fairly straightforward. You spent money, and you earned cash back, points or miles.
Today’s cards may only award you for certain spending categories, or the card may have rotating bonus categories.
Look for cards geared toward your buying habits. If the card offers cash back, don’t settle for one offering a mere 1 percent. The Blue Cash Preferred Card from American Express has historically had one of the best cash-back offers, giving 6 percent back on groceries. However, you can find other cards offering 3 or 5 percent back as well.
Some of the best rewards credit cards might come with an annual fee, but don’t immediately dismiss a card because of it. Many cards waive the fee for the first year, which gives you time to determine if the rewards are worth the cost.
Don’t be afraid to use multiple cards
The rewards credit card game works best if you have multiple cards in your pocket. That way, you can cherry-pick the best rewards for each purchase you make.
When you’re carrying multiple credit cards, the best way to use them is to affix a label to each card reminding you of the rewards level and which purchases are best with that particular card (i.e., dining out, groceries, gas, etc.).
Keep in mind that cards may cap rewards. For example, the American Express Blue Cash Preferred gives you 6 percent cash back on up to $6,000 in grocery purchases each year, but other cards may limit rewards to much lower amounts.
Keep track of your rewards levels for each card. When you max out a card’s rewards, remove it from your wallet for the rest of the year.
Jump on bonus offers
Some people earn impressive rewards by slowly and steadily racking up points and miles. However, to get the most bang for your buck, look for bonus offers that provide up to 50,000 points/miles or even more.
These bonus offers are generally for new accounts and have strings attached, such as charging $2,000 to the card within the first three months. However, they have incredible value. The best bonus offers can give you hundreds of dollars in free miles or points to be used toward travel or other rewards.
Connect your cards to loyalty programs
Most airlines have frequent-flier programs that can be connected to an airline-branded credit card. By combining the miles you earn from credit card purchases with the miles you earn by loyally flying a favorite airline, you could be in line for other perks such as seat upgrades, lounge access and concierge services.
Don’t forget about loyalty programs through hotels and car rental companies. Some allow you to transfer points to partner programs, a good way to supplement credit card rewards.
Get creative with your charging
Instead of buying new things in hopes of earning rewards, consider what you already purchase and use your card instead of checks, cash or an online bill pay service. Such items might include groceries and gas, or utilities.
If you need to spend enough to get a sign-up bonus, could you pay ahead on insurance? Buy a year’s worth of trash service? Or maybe load up on gift cards for the grocery store?
Before you make this switch, beware of processing fees. For example, some utilities and insurance companies let you make credit card payments but charge you a fee for the privilege. Make sure your rewards are worth the cost.
A final note on creative spending: Always shop through your card issuer’s website when making purchases online. Many credit card companies have online malls that offer the opportunity to buy from major retailers. These purchases then earn bonus points, miles or cash back.
Consider going for cash rather than miles
If you aren’t a traveler or if you want to keep things simple, cash-back cards may be more your style than cards earning points or miles.
Earning 40,000 bonus miles may sound good, but what does that really mean? It may mean $400 worth of free travel on one airline or $700 worth of free travel on another carrier. In addition, point and mile values can change over time if redemption levels and terms are adjusted.
On the other hand, 3 percent cash back is 3 percent cash back. You may find that miles and points give you more value, but if you’re a homebody, why bother getting free upgrades and companion travel tickets? Take the money and run instead.
Transfer points and miles between programs
Having credit cards from multiple card issuers could leave you with a lot of accounts with not enough miles or points to redeem for anything meaningful. That’s when you need to look for ways to transfer and consolidate earnings.
This strategy is part of the reason you want to sign up for frequent-flier or other loyalty programs. When applying for rewards credit cards, look for those with multiple partnering programs and those that will transfer points on a 1:1 basis.
Keep an eye on changing rules
Finally, remember the rules of the game are constantly changing. For example, cash-back cards used to give you flat rewards on all purchases. Now, many have rotating categories and caps on earnings.
The same goes for frequent-flier and loyalty programs. Some airlines now are basing rewards on the amount you spend rather than the miles you fly.
This article only scratches the surface of the world of credit card rewards. If you’re serious about maximizing these programs, follow one of the blogs mentioned above or join a forum such as FlyerTalk, where you can stay up-to-date on the latest promotions and winning strategies.
Got rewards-card experiences of your own to share? Share your thoughts in our Forums. It’s a place where you can swap questions and answers on money-related matters, life hacks and ingenious ways to save.