Last Updated on December 4, 2024 by Stacy Earl
Imagine going on your dream vacation without dropping a dime or getting a new wardrobe without pulling out your debit card. Whether you choose a credit card with cash back, points, miles, or another reward type, you’ll be laughing and earning all while using your card. The potential for earning credit card rewards is endless—spend on everyday purchases and watch the free stuff roll in! If you want free trips around the world, free cash, or points to use toward a variety of other purchases, you need to start taking advantage of credit card rewards!
Understanding Credit Card Rewards
Before you can start using credit card rewards, you must decide which reward is the best for you! With so many reward options available, we’ve rounded them up for you to check out:
- Cashback– You’ll get a percentage of everything you spend on your card. You can get this by statement credit, cheque, or direct deposit.
- Points– You can earn points for each dollar spent on eligible purchases. These points can be redeemed for merchandise, gift cards, travel, or other services through the credit card’s rewards portal.
- Miles– Similar to points, miles are used for traveling. They can be used to book airline tickets, hotel stays, and other travel expenses.
- Tiered Rewards– Some cards offer different rewards depending on what you purchase. For example, they might give higher reward points for travel and dining than for purchases at the grocery store.
- Rotating Categories– Certain categories that change periodically offer higher reward rates on these cards. But don’t miss out—you usually have to activate these rewards first!
- Sign-Up Bonuses– If you spend a certain amount within the first few months of opening your account, the credit card company will offer rewards like bonus points, miles, or cash back.
- Perks & Benefits– Some credit cards offer additional perks such as access to airport lounges, travel insurance, extended purchase warranties, and more.
Choosing the Right Credit Card
There are so many credit card options out there that it may take a lot of work to choose the right one! We’re here to help narrow down the choices for you so it’s a no-brainer:
- Identify Your Spending Habits: A simple way to choose the best card is to determine where you spend the most money. If you spend more on dining, travel, or purchases, you’ll need to pick a card with the type of reward that best suits your needs.
- Compare Card Benefits: As mentioned above, you can receive many credit card rewards from various cards! But there are other things to consider when choosing a credit card, like:
– Annual Fees
– Interest Rates (Annual Percentage Rates, or APR)
– Credit Limits
– Credit Score Requirements - Resource Spotlight: To compare Credit Cards and see the different rewards they offer and fees they charge, check out some websites below where you can compare credit cards side-by-side:
–Nerd Wallet
–CardMatch
Pitfalls to Avoid
Credit card rewards are an exciting feature many people use to save money and get free things! However, not knowing what to avoid regarding credit cards can put you in a bad spot.
– Interest Rates and Fees: You’re charged more interest when you carry a higher balance on your credit card! It’s extremely important to keep balances paid off as you use your card—this doesn’t mean you have to put money directly on your card as soon as you use it, but it’s a good idea to put money on your card every time you get paid. Credit card balances below 30% are what credit bureaus like to see, keeping your credit score in tip-top shape.
– Reward Changes: Your credit card’s reward amount or types can sometimes change. Keep up-to-date with changes by checking your credit card statements regularly or signing up for newsletters or alert services that alert you of changes in your credit card’s terms or rewards programs.
– Overspending: Even though you may have a high credit limit on your card, it’s important to spend within your budget. If you’re putting so much money on your credit card that you can’t pay it off to a reasonable monthly balance, you’re likely spending too much and need to re-evaluate where your money is going.
High Roller Moves: Taking Credit Rewards to the Next Level
Now that we know the basics of credit card rewards, we have a few advanced strategies that could help you earn even more rewards.
Card Churning
This is the process of repeatedly signing up for credit cards to earn their introductory bonuses—and then discontinuing use after reaping the benefits. Card churning involves carefully timing applications, meeting the card’s spending requirements, and often closing the card before you have to pay the annual fees. While this can be beneficial in terms of cash back, points, or miles, it carries risks, such as potential negative impacts on your credit score due to frequent credit inquiries and reduced average account age. Credit card issuers have also implemented various measures to counteract churning, making it more challenging to benefit from this strategy.
Points Transferring
Transferring credit card points to travel partners—such as airlines or hotels—is a powerful way to maximize the value of your rewards. Points can often be worth more when transferred and redeemed through partners than when using them directly for cash back or credit statement purchases. To get the best value, you need to compare the transfer ratios and the redemption rates of potential travel partners. This strategy is particularly beneficial for frequent travelers who can align their point usage with travel goals, ensuring they receive optimal value from their rewards.
Combining Cards
Using multiple credit cards strategically can significantly enhance the benefits received from reward programs. By combining cards that offer complementary rewards, such as one card offering high cash back on groceries and another on dining and travel, cardholders can optimize their earnings across different spending categories. Additionally, some cards offer bonuses on overall spending or specific types of purchases, which can be paired with other cards’ benefits! It’s important to understand the specific reward structures of each card and use them to give you even more bang for your buck!
Investing Your CashBack Earnings
You’re creating even more ways to earn by investing your cashback earnings! As you invest, your money grows, earning you even more rewards as you continue to invest your cashback earnings. We know—investing can be as confusing as it is exciting, but if you want to get the low-down on investing to get the most bang for your buck, check out these KashKick articles:
A Beginner’s Guide to Investing
KashKick’s Top 5 Investing Apps
Elevate Your Earnings—Take Advantage of Credit Card Rewards!
From lounging in luxury without loosening the purse strings to snagging that haute couture at zero cost, the magic of credit card rewards is real. Whether you’re a newbie just testing the waters or a seasoned card-slinger looking to elevate your game, remember: the world of credit card rewards is your oyster, ready to be explored! So swipe smart, maximize those perks, and keep your finances as dazzling as your rewards portfolio. Here’s to making every swipe count and turning the mundane into the extraordinary, one purchase at a time! Cheers to smart spending and even smarter earning!