When you go to all the trouble of tracking down a rewards credit card that gives you points on the things you buy most (groceries, gas, restaurants, etc.) and balance it with the types of rewards you want most (travel miles for airlines and hotels, or alternately, cash back), you definitely want to make sure you get the most out of it. This could mean spending up to a certain amount on certain purchases each year to maximize points, but you might also need to understand introductory offers, which could have limitations of 3-18 months (or more).
For starters, it’s always best if you enjoy a top tier credit rating, as this will net you the best terms, namely for APR. When it comes to maximizing your rewards, however, you may have to adopt the attitude of spending money to make money, and this can be a little dangerous if you don’t have a solid strategy in place to gain the greatest advantages and save in the long run.
You could just end up racking up a bunch of purchases that you can’t really afford to pay off. Sure, you’ll get points, but at what cost? If you pay more in interest than the value of the points, you’re really not winning. It doesn’t even take a lot of complex math to figure out how to make this work for you. All you have to do is determine the best way to spend to get maximum points within your budget, ideally for purchases you’d make anyway. Here are just a few tips to help you meet the minimum spend for your credit cards, maximizing rewards along the way.
Choose the Right Card
This is your prime directive if you want to get the greatest possible rewards from your spending. You’ll want to start by tracking your spending to figure out where you spend the most. This will give you an idea of the types of points systems to look for.
If you travel frequently for work and have to foot the bill before your company reimburses you, you’ll want a card that offers the most points for airline, hotel, and rental car spending, for example. If your main purchases each week revolve around groceries and gas, you’ll want a card that offers the most points for these types of spending.
Of course, it’s also important to have some clue about how you want to use the points you accumulate, because taking advantage of rewards means choosing something you’ll actually use. If you haven’t had a vacation in three years, picking a card with points for travel that expire at some point is probably a no-no since you may not use them. A cash back card may suit you better.
Finally, make sure to look into the possibility of cards that take advantage of membership status, especially if you are active military, a veteran, a federal employee, etc. These cards often offer greater rewards than others, but you’re only eligible if you’re a member of the group.
Weigh Points versus Percentages
When you see some cards offering 4% cash back on groceries and others offering 3x cash back, you might think the that points and percentages are equal, in which case the former would be more desirable. However, this isn’t always the case.
Percentages are often a straight 1-for-1 trade with dollars spent, but points could mean anything. Every point could equate to 1.5%, for example, in which case 3x points would equal 4.5%. It’s very important to understand how the system for accumulation of points versus percentages works to ensure you’re actually getting the best deal with any credit card you choose.
So, you got yourself a card that offers optimal rewards on groceries and gas, or on travel bookings. Now you need to understand what it means when they say things like “qualifying” or “eligible”. For example, some cards specify qualifying U.S. supermarkets or gas stations, and there is likely a list of acceptable brands to choose from. You need to make sure these are readily available in your area and that you want to use them for purchases.
Some hotel cards will only rack up points and offer rewards at participating locations, especially if different locations are under ownership by franchisees. Knowing where the greatest points come from is an essential aspect of spending accordingly to gain the greatest benefits. You should always check if online purchases apply, as well.
Plan Ahead, Especially for Major Purchases
The last thing you want to do is spend willy-nilly and end up over your head in debt, virtually negating any benefits. This means planning ahead to spend strategically so you can pay off your card each month, avoid interest, and gain the greatest value.
If you’re planning a major purchase like airfare and hotels for an upcoming trip, for example, save up and make this spend part of your introductory offer so you can maximize points and still pay off your balance expediently. With proper planning, you’ll meet minimum spend and maximize rewards.