How Much Extra Can You Earn a Year From Rewards Credit Cards?

Rewards credit cards seem to be everywhere these days, but the majority of people who have them don’t use them as effectively as they could. When used to their full potential, it’s estimated that rewards credit cards can earn the average U.S. consumer as much as $1,000 per year in rewards, including cash back, points discounts and purchases, miles, hotel stays, free fuel, and more.

The people who make the most from credit card rewards are the ones who have taken the time to create an effective strategy based on the rules and guidelines of the program(s) for which they’re enrolled. For example, if a card offers 2% cash back on online purchases, it would make sense to designate that as your “online shopping credit card” and then pay off the bill. That way, you’re earning money on something you were going to buy anyway.

How to Maximize Credit Card Rewards

In order to get the most out of your credit card rewards, here are some pointers.

Choose your card(s) carefully

Choosing any credit card comes with its own considerations. When you’re going to invest in a rewards card, it’s even more important to be diligent and deliberate in your selection. It doesn’t matter what a great rate you’re offered on a miles card, for example, if you don’t travel. Find a rewards card that works for you.

Understand the program

Rewards programs were not made to be difficult. However, they do include a lot of terms and conditions, and they are often structured with the hope that most people won’t read the fine print or worry about the rewards they’re missing. Therefore, if you want to make the most of your rewards, you need to know the details of the program. Find out:

·  What earns rewards

·  What bonus rewards are available

·  How frequently they change/offer promotions

·  Redemption rules and guidelines

·  Any blackouts or limitations

Choose one card for recurring bills

Use a rewards card to pay all of your monthly bills, and then pay the credit card bill off when it arrives. That way, you’re again earning money for bills you were already going to pay. Just make sure that if you do this, you don’t use the card for any other expenses or you could run into budgeting issues.

Do the math before you buy

The best thing that you can do is to know what kind of rewards and offers are available for a purchase that you’re going to make. Some cards have tools to assist, like the Capital One Shopping Assistant. You can also look up the deals and savings on your own. For example, if you know you get 1.5% cash back in addition to a bonus of 5% cash back from the vendor by using your credit card, don’t pay cash. Get those rewards, then use the cash to pay the credit card bill.

The Bottom Line

Whether it’s miles, hotel stays, or cold hard cash, there’s a lot to be said for credit card rewards when you use them wisely. Take the time to explore different rewards programs and learn about the cards available. That will help you find the right rewards credit card that fits your lifestyle, your spending habits, and your taste for being rewarded for spending.

Above all, it pays to be deliberate when using your credit. Even outside of rewards credit cards, there are so many benefits that come from intentional, smart use of your credit. And if you can earn an extra thousand bucks along the way, you might as well capitalize on that.