Credit card companies do not offer rewards because they’re trying to do you a favor. They offer rewards for two reasons. The second-most important reason they offer rewards is to gain a competitive advantage over their competition, so you use their credit card instead of another. They compete on value since the product is otherwise basically identical.
But the most important reason credit card companies offer rewards is to get you to use your credit card more and spend more money. They’ve run the numbers, and they know they’ll get more money out of you than you get out of them. That is, unless you play the game very, very smart.
We chatted with a handful of credit card rewards experts and came up with five things you need to do if you want to boost your credit card rewards. They might not mean you actually make a profit off using your card, but you’ll get more out of your rewards than you would without using them.
5 Ways to Boost Your Credit Card Rewards
1. Read the Fine Print
And the bold print. Read everything. Know all the details of your card and the reward programs attached to it. Only keep credit cards with rewards that exceed the cost in annual and maintenance fees. Know which cards have grace periods, and which ones charge the lowest interest.
Most importantly, know what rewards each card offers in each category. If you have two credit cards, one of which offers 3% back for gas and another that offers 2% back for dining out, you know which one to use at the pump and which to use at a restaurant.
While you’re at it, keep a list of the ancillary rewards. Many cards have partnerships with major retailers, extra rewards during certain time periods, roadside assistance benefits, and other little things available for cardholders — if you know what they are and remember to use them.
2. Leverage Introductory Offers
These are most common with airline miles cards, but you can see some regular rewards cards with similar deals. They work like this:
- Step One: Open a new card
- Step Two: Make a certain number of purchases in a set amount of time
- Step Three: Receive a (usually quite large) number of bonus points, miles or rebates
With the better cards, these introductory offers can be in the tens of thousands of airline miles and hundreds of dollars in account credits. When you see one on a card that works for you, check to make certain the introductory offer has a value higher than any initiation fees or other annual expenses, then move forward with a purpose.
More than one person has racked up several low or no annual fee cards they only use to get the introductory bonus. After that, they sit there in a desk drawer unused, offering resources for emergencies, and improving their credit rating.
3. Set Up an Expenses Pipeline
The key to using credit card rewards is to spend money on your card, then pay them off. One of the best ways to do this is to use the card for your regular expenses like groceries, utilities, tuition payments, and gas.
Under normal circumstances, most people pay these expenses directly out of a checking account. It adds up to thousands of dollars each month spent without accumulating rewards.
With an expenses pipeline, you set up all of your regular expenses (especially automatic expenses like your utilities) to get paid on your rewards credit cards. Then, you set up your checking account to pay off those payments before the interest and finance charges hit. Once the system is automated, it starts racking up rewards invisibly, behind the scenes, every month.
This can be especially powerful if you own a small business, or regularly make business purchases and get reimbursed by your employer. Business expenses are often much larger than your personal budget, and thus, accumulate rewards that much faster.
4. Watch for Promotions and Offers
This is another method most helpful with air mile cards, but that shows up on other kinds of rewards from time to time. Keep an eye out for special offers where you get extra rewards for making a purchase or extra value from redeeming rewards. For example, Southwest Airlines routinely offers double rewards for flights booked with their in-house credit card.
Taking advantage of this method takes a lot of attention, but you can simplify it by setting up a google alert for “(Name of your credit card) rewards.” When you do that, you’ll get an email any time news like a promotion or offer goes live.
5. Get Goal-Oriented
Things get done when you set a goal that often won’t happen any other way. Sit down once a quarter, or twice a year, and make goals about using your credit card rewards. Some examples might include:
- Reach the introductory offer threshold on a new card
- Accumulate enough air miles to take a vacation to someplace specific
- Rack up a certain amount of dollar value in rebates
Once you set that goal, you’ll be surprised by how many new ways you find to use the relevant cards to get your rewards flowing. It’s a simple matter of putting it in the front of your mind, so you remember every time there’s an opportunity to make progress.
Final Thoughts
Cashing in on credit card rewards is not a zero-risk game. If you lose focus or miss a payment, you’ll spend more money on fees and interest than even an excellent rewards program will provide. You’ll need to be attentive and detail-oriented. But if it works, you can find the whole thing very…um…rewarding.
Have you found effective ways to boost your credit card rewards? What are your tips?
Brenda Green is a freelance personal finance writer and consultant. She writes about credit cards, budgeting, and investing for several digital publications and blogs around the world. When not writing, you can find her in her garden or walking her Golden Retriever, Sam.