How to maximize credit card rewards: 6 ways to benefit

Credit cards give you payment flexibility and can streamline your money management. Many cards also earn rewards, like cash back.

Your credit card rewards can help you pay for big-ticket purchases, like your next vacation, cover your next grocery trip or simply give you a little treat when you need a pick-me-up. Read on to find out how to maximize your credit card rewards.

1. Consider how much interest you’ll pay

Resist the temptation to spend more than you normally would just to earn bonus points. Overusing your card can spiral out of control quickly and put you into serious debt. Additionally, using more than 30% of your available credit can bring your credit score down.

Keep in mind that:

Interest charges can negate any rewards or sign-up bonuses you received. The smaller your balance, the less interest you pay.

Take for example a $1,000 balance at 15% APR (annual percentage rate) and 1.5% cash back. If you pay that balance off in one month, you would earn $15 and be charged zero interest. However, if you pay that balance off in increments of $100 over 11 months, you would still earn $15, but you would also accrue $6.55 in interest, leaving you at a net loss.

2. Pick the right credit card for you

All rewards-earning cards are not created equally, so take your time and pick a card that works well with your spending habits. Some cards require more strategizing than others to reap the benefits, so make sure you shop around and read the fine print before deciding. Here are a few types of credit cards you’ll likely come across:

• Flat rate cash back: These cash-back cards give customers cash back at a flat percentage rate for all eligible purchases. In the above example, the customer earned $15 on a $1,000 purchase, or 1.5% cash back.
• Tiered rewards: Rather than a flat rate, companies also offer rewards on certain purchase categories. For example, this month you might earn 5% at the grocery store and 3% at restaurants.
• Travel rewards: With a travel rewards card, you accrue points on every purchase you make. But instead of getting cash back, you earn points that you can use to book flights and hotels.
• Cards with an annual fee: Cash-back cards typically don’t have an annual fee. However, some do to offset the cost of reward percentages higher than typical cash-back cards. You’ll have to do the math to make sure it’s worth the fee.
• Store credit cards: These cards tend to offer high reward percentages because normally you’re only allowed to redeem your points with the company’s brands.

3. Pay attention to special offers

While you’re shopping around, pay attention to special rewards credit card offers and promotions. Many companies run limited offers with big benefits. Of course, the credit card company is trying to entice you to sign up. So first make sure the terms and conditions of the card are right for you. Keep in mind that opening up too many credit cards could impact your credit score.

If you’re an existing customer, consider subscribing to your credit card company’s email list as this will allow you learn about any additional rewards offers and benefits.

4. Use cash-back apps

Independent websites and apps offer customers cash back for shopping through them rather than directly with a retailer. Sites like Rakuten ™, Dosh^®, and BeFrugal^® receive a commission from retailers when you shop through their site or app, and they share that commission with you by giving you cash back on each order. Simply switching the site or app you shop through could earn you cash for little effort.

5. Use one card for everything

You don’t need to increase your spending to earn credit card rewards. You make plenty of purchases already when you’re filling your gas tank, buying clothes or ordering take out to maximize credit card rewards. Consider using your favorite cash rewards card to pay for these common purchases. Just make sure you’re staying on top of paying the bill each month and keeping your balance low.

6. Consider picking up the tab

If you’re planning a future trip with your friends, you can get creative with earning cash back. Consider booking flights and hotels with your rewards credit card and having your friends transfer the cash to you.

This strategy isn’t just limited to vacations: If you’re splitting the cost of a gift with friends or coworkers, offer to pay with your card. Just make sure your friends pay you in advance, before you swipe your card to avoid accruing a lot of interest.

Get the most from your credit card

Maximizing your credit card rewards doesn’t mean spending more than you normally would. Rather, it’s being strategic about what you’re already spending. Find a Citizens credit card that fits in with your lifestyle and allows you to earn rewards.

Manage your Citizens credit card anytime, anywhere

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