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Credit card rewards can be a great way to get extra money back, get discounted trips, and more. To get the most out of their rewards, credit card enthusiasts use sophisticated methods to get the most value out of every point and mile earned.
But if you’re new to credit card rewards, the learning curve can be overwhelming. Additionally, many points and miles professionals focus on niche redemptions such as international business class flights and luxury hotel stays, which often require many rewards and complex strategies.
If you’re not interested in digging deep into the “travel hacking” weeds but still want to use credit card rewards to improve your life — and your finances — these hassle-free approaches can help.
7 basic ways to make the most of your credit card rewards
Learning all the tips and tricks that seasoned credit card enthusiasts use can take months or even years. Whether you’re interested in developing these skills long-term, here are some approaches you can take to your credit card rewards that don’t require a lot of experience or complexity.
1. Choose a card that matches your spending
Some credit card rewards programs are arguably better than others because they offer more flexibility and more valuable redemption options. But redemption is just one piece of the puzzle with cashback, points and miles.
Focus on the cards that best fit your spending and preferences as you try to find the best way to earn rewards.
If you don’t spend a lot in these categories, the card might not make sense for you. Instead, you can consider those Capital One Venture Rewards Credit Cardwhich offers a flat 2 miles per dollar with every purchase – double the base rate of the Sapphire Preferred.
And while redemption options and values may vary between these two cards, if you prefer a simpler approach to rewards, the latter option might be more appealing to you.
“Look at your last year’s financial statements to see which category you typically spend the most on, and then find a card that fits that,” said Andrea Woroch, consumer and money-saving expert and contributor to US News.
Take the time to shop around and compare multiple rewards credit cards before deciding which one is best for you.
2. Consider your financial situation
Many credit card rewards experts live and die on travel rewards, and the deeper you delve into your rewards maximization strategy, the more meaningful it can be to focus on travel rewards.
But if you’re just starting out, it might be a good idea to consider cash-back credit cards instead. With Cashback, you can use your rewards for anything you want, including:
- pay off debts.
- Build your emergency fund.
- Saving for retirement.
- cover necessary expenses.
You can also think of your cashback rewards as your “fun money,” allowing you to use more of your income for necessities and important financial goals.
However, before you apply for a cashback credit card, make sure you understand your redemption options. Some credit cards may only allow you to receive statements on your credit card account, giving you less flexibility with your cashback rewards. Consider a card that offers direct deposit or even a paper check so you can really use the cash however you want.
3. Treat yourself to gift cards
Many credit card rewards programs, including cashback, points, and miles programs, allow you to use your rewards to purchase gift cards at popular retailers and restaurant chains.
If you’re looking to treat yourself to a movie and dinner, expand your wardrobe or shop, there are dozens of gift card options to choose from. And while you may have more ways to use your cash, points or miles, it’s more important that you use your rewards to enrich your life the way you want it.
According to Woroch, it can even be worth redeeming travel rewards for gift cards when you don’t have travel plans and are on a tight budget. “You can use these gift cards to pay for a big purchase or as a gift for an upcoming celebration if you’re short on cash,” she adds.
However, please note that gift card redemption values may vary. In many cases, you can use cashback to buy a gift card at cost – e.g. B. A $25 gift card in exchange for $25 in cash—or get one for 1 cent per point or mile, which is a standard reward redemption rate.
However, some may only give you 0.8 cents or even 0.5 cents in value per point or mile. If a particular gift card offers you below-average value, that doesn’t necessarily mean you shouldn’t get it, but it should make you think twice and consider an alternative option.
4. Focus on limiting travel expenses
If you have a travel rewards credit card, you can use your points or miles to save hundreds or even thousands of dollars on trips.
For example, you can book a flight and pay only the taxes and fees, book a hotel stay and pay only the parking fees, or book a rental car, cruise, or other travel experience and pay little to nothing.
Many travel enthusiasts are obsessed with getting the most value out of every point or mile, and luxury redemptions like international business class flights can offer far more value per point or mile than other redemptions. For example, if a Business Class seat costs $6,000 or 150,000 miles, you get an impressive redemption value of 4 cents per mile.
But what many of these travel experts gloss over is that they often earn far more awards than most people, so spending 150,000 miles on a business class flight can only put a dent in their award balance sheet.
If you can book five or more economy flights with the same 150,000 miles, you might not get a fancy experience, but you would get more value in the form of more experiences. Economy is also usually the way to go if you’re booking for multiple people, says Nicolette Kay, travel expert and founder of Semi-Budget Travel.
Even if you’re not making the most of your travel rewards in terms of redemption value, you still win by focusing on limiting your travel expenses.
5. Focus on redemptions that make sense to you
You will hear many opinions on which redemptions are the best, and this list may vary by rewards program.
But while some redemptions are better than others in terms of the value you can get per point or mile, it’s important to focus on what makes the most sense for you.
For example, the best way to use hotel points is to book award stays at hotels in the loyalty program. You may also have the opportunity to redeem your awards for destination excursions, spa services and more.
Think about the type of experience you want and use that to decide how to redeem your credit card rewards.
6. Avoid paying interest
Credit card rewards can encourage you to use your credit card more often, but if you’re not careful you could end up overspending. If you spend more than you can afford, you end up paying interest, which can neutralize the value of your premiums.
Therefore, it’s important to create a budget and track your spending so you don’t run into financial difficulties and end up paying more in interest than you get in value from the rewards.
7. Use your “orphan” points and miles
If you stop using one credit card in favor of another, you may not be able to use up all of your rewards at once. If you have a few thousand points or miles left and aren’t planning on earning more — at least not fast enough to matter — find ways to use them so they don’t go to waste.
For example, some award programs allow you to use these “orphan” miles to purchase merchandise or get magazine subscriptions. They might not be the most valuable redemption options, but you still get something from them.
Don’t be afraid to adjust your rewards strategy
Over time, you may learn more about how to make the most of your credit card rewards, and your earning potential and redemption preferences may change. Don’t be afraid to revisit your approach to credit card rewards every now and then to make sure you’re still maximizing your rewards in a way that makes the most sense for you.
“I would suggest that you just get one card at first. Choose the card that is most likely to help you achieve your goals,” says Kay. “Use this map to actually work toward and achieve those goals. Then take stock and decide if you want to switch to other cards.”