How to maximize your credit card rewards

Having a rewards credit card in your wallet opens a world of possibilities. You can travel the globe, take a last-minute flight to visit friends and family, and experience the finest first-class cabins and luxury hotels. Even if travel isn’t your primary objective, you can use your points to pay bills and cover rising inflation costs.

But getting those perks also means you’ve taken a minor credit score hit to acquire that card in the first place, and you may even be paying an annual fee — which is why a good strategy is key to getting the most out of your rewards credit card.

Here are nine things you need to know about getting maximum value from your credit cards.

Even before applying for any rewards credit card, it’s crucial to have a goal in mind. Are you looking for free hotel nights? Or perhaps you want to save up miles for a first-class flight. Your goals will directly dictate the type of rewards credit card you should get and how to maximize it.

For example, if you want to fly first class, a cash back card won’t serve you as well as an airline or transferable rewards card. If you want a card with elite status or annual free night awards, you’ll want a co-branded hotel credit card. How you redeem your rewards and the types of benefits you’ll use will impact the type of rewards card you should apply for.

And it’s not just how you travel but where you travel that will determine the type of card you should get. If you’re primarily a domestic traveler based on the west coast, the Southwest credit cards might be a good fit. They offer generous welcome bonuses, which count towards a companion pass.

If you live in a United hub and travel abroad frequently, a United credit card or Chase Sapphire Reserve® Card might be a good fit. The latter earns points you can transfer to United 1:1 and grants you Priority Pass airport lounge access.

As part of a good credit card strategy, you should familiarize yourself with all of the best credit cards and the value of credit card rewards programs. This way, you can determine which one you can get the most value from.

Once you’ve determined your goals, it’s time to pick a credit card that helps you achieve them.

Several factors go into choosing a credit card wisely. Here are just a few that will help you get the most out of your rewards card:

Your spending habits

While your redemption goals are important, having a credit card that rewards your spending is just as vital. Most rewards credit cards offer bonus points on popular spending categories like travel, dining, and even groceries. To get the most out of your credit card, you’ll want one that rewards your most significant spending categories.

For example, if your biggest spending category includes restaurants and groceries, you should get the American Express® Gold Card, which earns 4x points on these categories.

If your spending can’t be broken down into just a few categories, the Capital One Venture Rewards Credit Card that offers 2x miles on every dollar spent might be a better fit.

Your travel needs

Your travel needs are just as important as your spending habits.

If you travel frequently, you might benefit from having a Priority Pass™ Select membership. Rather than spending hundreds of dollars on a lounge membership or airport restaurants, you can get this benefit covered with credit cards like the Chase Sapphire Reserve® and Capital One Venture X Rewards Credit Card.

If you stay at hotels enough to benefit from having elite status but not enough to earn it, a hotel credit card can be a great addition to your wallet:

• The Hilton Honors American Express Aspire Card offers top-tier Honors Diamond status.
• The Marriott Bonvoy Brilliant® American Express® Card comes with automatic Bonvoy Platinum status.
• The World of Hyatt Credit Card earns you mid-tier Discoverist status while spending your way to top-tier Globalist.

Cards that pair well together

Sometimes maximizing a rewards card requires pairing it with another one.

For example, you’ll earn 5% on travel (purchased through Chase Ultimate Rewards®) to 3% on dining and drugstores, and unlimited 1.5% back on all other purchases with the Chase Freedom Unlimited®(after the first year or $20,000 spent). This card technically earns Chase Ultimate Rewards® points, but you’re limited to redeeming them for cash value at a rate of 1 cent per point, which is why it’s considered a cash back card.

But there’s also more flexible redemption cards in the Chase family, like the Chase Sapphire Preferred® Card.

Nearly every rewards card has a spending requirement that you need to complete to earn the welcome bonus. Spending requirements can range from $500 to $15,000 or more.

Be sure to consider this when applying for a new card. The last thing you want is to get a credit card for which you can’t meet the spending requirement and miss out on the bonus. We’re talking 50,000 to 100,000 miles or more for most cards! That’s a lot of potential travel you’d be giving up.

If you already have a rewards credit card, then look at some of the annual spending bonuses you can complete.

For example, the Hilton Honors American Express Surpass® Card offers an annual free night award when you spend $15,000 in a calendar year. By being strategic with your spending, you can get a lot more out of this card.

Some rewards credit cards offer quarterly bonuses of 5% at rotating merchants. The catch? You must remember to activate them by a specific deadline. If you make a habit of activating the bonus on time and maxing out the $1,500 spending limit, you’ll get lots of value from your rewards credit card.

The best part is these cards don’t have annual fees, so you can keep them in your wallet long-term without worrying about the value proposition. Most of them require you to activate the bonus each quarter, which requires a bit more effort.

Here’s a look at credit cards with rotating quarterly bonus categories:

Chase Freedom Flex℠

The Chase Freedom Flex℠ is perhaps the most well-known card that earns a rotating 5% back on up to $1,500 in combined purchases in bonus categories each quarter you activate.

The great thing about the Chase Freedom Flex℠ is that if you have another Ultimate Rewards®-earning credit card, you can convert your cash back to points. So instead of earning 5% cash back, you would earn 5 Ultimate Rewards® points per dollar spent.

You can then redeem those points for high-end awards like all-inclusive Hyatt hotel stays, first-class airline tickets, and other great experiences. In other words: your points could be worth a lot more than the cash.

Citi Custom Cash℠ Card

The Citi Custom Cash℠ Card differs from the other cards offering 5% cash back deals because you don’t have to activate them every quarter. Citi automatically awards 5% cash back to your highest spending category every month.

Eligible categories include restaurants, gas stations, grocery stores, select travel, select transit, select streaming services, drugstores, home improvement stores, fitness clubs, and live entertainment.

Discover it® Cash Back

The Discover it® Cash Back offers 5% cash back on up to $1,500 in rotating categories every quarter. You can check the Discover 5% cash back calendar for the latest bonus categories. All you have to do is register before the end of the quarter to qualify for the bonus.

Rewards credit cards carry high interest rates of 25% and higher. These rates kick in when you carry a balance and can add up substantially. Interest fees can offset the value of any rewards you’re earning, so it’s crucial to avoid them by paying your card off every month.

If you don’t think you can repay your balance in full every month, you might consider charging only your recurring monthly bills to your card. That way, you’re still earning points on essential spending but avoiding the temptation of overspending.

One of the best ways to maximize credit card rewards is by taking advantage of recurring benefits.

Many rewards cards offer perks like elite status, travel credits, Global Entry/TSA Precheck application fee reimbursement, and others. These benefits aren’t just reserved for high-annual-fee cards.

For example, the no-annual-fee Chase Freedom Unlimited® is one card I usually look at.

Familiarize yourself with the benefits your rewards credit card offers and try to use them every year. You’ll recoup your card’s annual fee and get the most out of having a rewards card in your wallet.

Some banks offer cash back and bonus point deals that can help you get more out of your credit card. The most well-known is Amex Offers, though Chase and Capital One have their own versions of this program.

With Amex Offers, you can select from hundreds of merchants that offer exclusive deals for American Express cardmembers. You might see $50 discounts on $250 Marriott stays, 20% discounts at your favorite retailer, cash back on utility bills, or 5x points on Amazon purchases.

Chase Offers are also generous, with recurring deals like 20% off at GAP stores, $5 back on grocery purchases, 15% off at select hotels, and more.

Deals like this can easily offset the annual fee on your credit cards, so be sure to check them out from time to time.

It doesn’t matter if your credit card offers bonus points on dining or not. You can earn bonus points at participating restaurants by enrolling your card in a dining rewards program. Nearly every major airline and hotel chain has a dining rewards program that’s completely free to join.

All you have to do is sign up, register your rewards credit card and dine at participating restaurants. You’ll earn between 0.5 and 8 points per dollar spent, depending on the program – in addition to the rewards earned from your credit card.

You’ll also earn a first-time bonus of 1,000 to 3,000 points, with the ability to earn additional rewards.

Here are the earn rates for popular dining rewards programs:

• American AAdvantage Dining: 1-5 miles per $1 spent
• Alaska Mileage Plan Dining: 1-5 miles per $1 spent
• Delta SkyMiles Dining: 1-5 miles per $1 spent
• Free Spirit Dining: 1-5 miles per $1 spent
• Hilton Honors Dining: 2-8 points per $1 spent
• IHG Rewards Club Dining: 1-8 points per $1 spent
• JetBlue TrueBlue Dining: 3 points per $1 spent
• Marriott Eat Around Town: 4-6 points per $1 spent
• Southwest Rapid Rewards Dining: 1-3 miles per $1 spent
• United MileagePlus Dining: 1-5 miles per $1 spent

Dining rewards programs are a great way to get more out of your rewards credit card without much effort or additional cost. It’s truly a set-it-and-forget-it method of earning points.

Last but not least, knowing how much your points are worth will help you get the most out of your rewards card.

The value of points varies greatly depending on the program, with hotel points often being of lower value than airline miles and transferable rewards. That doesn’t mean you shouldn’t collect them — rather, you should be more discerning in how you redeem them.

By having a baseline point value to work with, you’ll avoid low-value redemptions (like using points for gift cards) and get more value out of your rewards card.

For example, if you have The Platinum Card® from American Express and frequently redeem your points for gift cards at 1 cent each, you might be better off with a no-annual-fee cash back card like the Citi® Double Cash Card. You’ll save the $695 annual fee and get more out of that card than the Platinum.

Rewards credit cards are excellent tools for subsidizing the cost of travel or even your living expenses. As such, understanding how to maximize your credit card points is an important step in achieving that objective.

By familiarizing yourself with your card’s various benefits and best uses, you can maximize your points and get much more value out of your card than the annual fee or interest rate you’re paying.