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While many rewards enthusiasts focus on signing up for new credit cards to earn bonuses, not everyone has the time or desire to engage in this strategy. Managing multiple cards, annual fees, and rewards programs requires effort, and some individuals prefer to use their time differently.
If you identify with this perspective, it may be more beneficial to maximize one or two cards rather than pursuing numerous rewards. Luckily, you can accumulate ample rewards over time by being strategic about your card’s benefits and bonus categories.
The key to maximizing your rewards cards is understanding how they function and seeking opportunities to earn more points on everyday spending. Here are some helpful tips:
Evaluate Every Bill You Could Pay with a Credit Card
Rewards cards provide points for each dollar spent, so finding ways to use credit for your expenses is the best approach to enhancing your rewards. Start by assessing which of your monthly bills can be paid with a credit card.
Even if you haven’t realized it, bills you’ve been paying with checks or debit cards for years may be eligible for credit card payments without incurring fees. While your expenses will vary, consider paying the following bills with a credit card:
- Rent
- Utility bills (electric, gas)
- Health insurance
- Internet and cable TV
- Cell phone
- Taxes
- Daycare
- Auto and home insurance
- Subscriptions
- College tuition or student loans
- Medical expenses
- Lawn care
These are just examples of bills you could pay with credit. Depending on your unique situation, you may have other payments that can easily be settled with a credit card.
Additionally, remember to utilize your credit card for everyday expenses such as groceries, dining, gas, and miscellaneous spending. Whenever possible, strive to pay with your rewards card.
Utilize Your Rewards Card Bonus Categories
It’s also vital to take advantage of your card’s bonus categories. This is particularly important if you possess multiple cards with different bonus offerings, as you’ll want to ensure you’re selecting the optimal card for each transaction.
For example, if you have a travel credit card that earns 3x points on dining and travel, along with another card that earns 6x points at grocery stores, use your travel card for dining and travel expenses while reserving the other card for grocery purchases. Although the rewards earned on individual transactions may seem minimal, consistently using the appropriate card can accumulate a significant amount of rewards over time.
Set Up Auto-Pay Bills to Be Charged to Your Credit Card
Many of us have automatic payments set up for various services such as Netflix, Hulu, gym memberships, or utility bills. Ensure that every bill set for automatic payment uses your rewards card instead of a debit card, allowing you to earn rewards points from those monthly expenses.
Take Advantage of Shopping Portals and Dining Clubs
Numerous flexible rewards programs, airline loyalty programs, and hotel memberships feature shopping portals that can increase your points. Major airlines like American, Delta, and United also have shopping portals that operate similarly.
Additionally, programs like Southwest and Delta offer dining clubs that let you earn extra points or miles when dining at participating restaurants. Joining these programs is free and provides a simple way to earn more rewards as you dine out.
Potential Earnings for the Average Family
If you’re doubtful about a family’s ability to accumulate significant rewards without constantly applying for new cards, consider a practical example. Imagine a family of four with two adults who each have rewards cards. Collectively, they might hold:
- A cash-back card earning 2% back
- A travel credit card yielding 3% on dining and travel
- A rewards card granting 6% cash back at the grocery store (up to $6,000 in annual spending)
Using average spending data from the Bureau of Labor Statistics, we can estimate the total rewards this family could earn in a year based on common expenses:
- Food at home ($4,363): $261.78 at 6%
- Food away from home ($3,365): $100.95 at 3%
- Utilities, fuels, and public services ($3,836): $76.72 at 2%
- Household operations ($1,412): $28.24 at 2%
- Household supplies ($755): $45.30 at 6%
- Household furnishings and equipment ($1,987): $39.74 at 2%
- Apparel and services ($1,833): $36.66 at 2%
- Gasoline and motor oil ($1,968): $39.36 at 2%
- Other vehicle expenses ($2,842): $56.84 at 2%
- Healthcare ($4,928): $98.56 at 2%
- Entertainment ($3,203): $64.06 at 2%
- Personal care products ($762): $45.72 at 6%
- Education ($1,491): $29.82 at 2%
Total rewards: $923.75
While earning over $900 in rewards in a year is impressive, the potential for higher earnings exists. These are merely a selection of expenses an average family incurs, and incorporating additional significant bills like daycare or rent could greatly enhance total rewards.
Cautionary Considerations
Maximizing rewards with credit cards can be beneficial, but there are pitfalls to be mindful of. Here are some factors to consider during your rewards journey:
Fees for Credit Card Usage
Although many bills can be paid with credit without incurring a fee, some vendors charge such fees when using credit cards. This is particularly common with utility bills, cable or internet services, rent, and insurance. Always verify that you’re not being charged a fee before making a payment with a credit card.
Annual Fees
Be aware that certain rewards cards impose annual fees. These fees may be justifiable based on your spending and the rewards you earn, but it’s essential to evaluate whether these costs are worth incurring. If you prefer to avoid annual fees, seek rewards cards without them.
Budgeting Risks
Relying on a credit card for all your expenses may simplify your finances but could also disrupt your budget. Ensure you’re only spending on pre-planned purchases and diligently track your spending, paying off your credit card balances regularly.
Avoiding Debt
Never charge purchases to your credit card that you cannot afford to repay while trying to earn rewards. The interest accrued will often outweigh any rewards benefits. If you’re concerned that using credit will lead to unmanageable debt, it’s wiser to use cash or debit instead.
