Cash-back credit cards – eight strategies to maximize rewards


A lot of people are drawn to rewards credit cards for, yes – you guessed it, the rewards.  Among the more popular of these are cash-back credit cards.  The reason these are so popular is mostly because the rewards are:

A) Universal – everybody can use cash in any situation, so the rewards will always be useful.  And you can earn cash back on anything, whereas some loyalty cards will earn you points only when you shop at one retail chain, and are only redeemable at that chain.

B) Measurable – people know there is no slight-of-hand going on.  $160 is worth $160 every time, and it will get you $160 worth of goods every time.

C) Discount – the cash-back rewards are like a discount on everything you buy, like scoring a sale price even when there is no sale.  And that always makes people feel good.

Are you maximizing your rewards?

Just signing up for a cash-back credit card does not mean you will get the most cash rewards possible.  There are some important strategies to milk the most cash from them.

The first strategy is to look for which cash-back rewards offer the highest rate.  Over the long term, the difference between a 3% reward and a 5% reward can be quite substantial.

The second strategy is to see which credit card offers the best sign-up bonus.  All other things being equal, grab the best bonus.  Why not?  This applies to pretty much any credit card, not just rewards cards.

The third strategy to do – and this is the big one – is to put as many of your purchases as possible on your cash-back credit card.  What does this mean?

  • If you usually pay cash at the grocery store, stop.  Start using your cash-back credit card.
  • If you have another credit card in your pocket, stop using it.  Use the one that give you the cash back.
  • If buying locally means paying by cash or check, search online.  Chances are you can buy the same thing online with your credit card (maybe even at a lower retail price – but read the fine print about shipping charges).
  • Can you buy your car with a credit card?  Well, believe it or not, you can sometimes pay for part of your car purchase with a credit card.  It pays to ask and even to be a little (politely) pushy about it.
  • Don’t forget the rent.  If you can put than on your card, that’s a big one!

The fourth strategy is not to get carried away with the third thing.  Yes, use your cash-back credit card for all your purchases, but DO NOT make purchases just because you’ll get cash back.  This is especially true if you are carrying a balance on your credit card.  After all, getting 2.5 percent back is of little use, of you end up having to pay over 10 percent in interest on the unpaid balance that results.

So the fifth strategy is to pay off your balance in full every month.  This should go without saying, and it applies to any credit card of any kind, but it is especially true if you wish to maximize the benefits of a cash-back card.

The sixth strategy is to review your regular payments.  Are there payments that come directly from your bank account that could be placed on your credit card?  These are often overlooked, and because they are typically monthly payments, they add up to a lot of cash-back rewards over time.  They are coming out of your account anyway, so why not flow them through your credit card?  It would be a pity to miss out on all that cash.

The seventh strategy you might or might not be able to do.  Do you ever have expenses at work?  If so, can you put them on your credit card and get reimbursed for the expense?  Sometimes, perhaps?  The more you can do this, the more cash you’ll get back.

Finally, at the end of the day, you just want to let loose with a few friends or colleagues at a restaurant or a bar.  If you see one of your comrades pulling cash out of his pocket when it’s time to pay the bill, the eight strategy kicks in. Grab the cash (politely) and put his portion of the bill on your credit card.  Why get cash back on just your purchases, when you could get cash back on other people’s purchases, too.

In the comedy version of this blog post, you can call up everyone you know and suggest that they refurnish their house – and you’ll be happy to go along with them when they shop.  Of course, this is not something you would do in real life, but you might have opportunities that present themselves, so always offer to put the purchase on your credit card.

Follow these eight strategies to make the most of any credit card cash-back program.

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