The average American spent approximately $850 on gifts during the 2018 holiday season. While it’s true that the holiday season is one of the most fun times of the year, it’s also one of the most expensive. If you spend wisely, you can earn lots of cash back by taking advantage of your credit card rewards.
Credit card rewards are a great way to make the most of your spending any time of the year if you know how to use them. Chase JPM, +0.48% Ultimate Rewards, for example, lets users earn extra cash back for by making purchases through participating retailers online.
Most people look at interest rates when shopping around for credit cards but rewards should also be at the back of your mind when shopping for a new credit card. Many cards offer rewards in the form of:
- Cash back
Some even offer a combination of all three depending on how you use the card.
What’s the difference between miles, points and cash back?
Credit card issuers offer different types of rewards. These rewards usually come in the form of miles, points or cash rewards. Rewards are redeemed in different ways depending on the credit card issuer’s rewards program.
Miles are usually associated with travel rewards. The miles you accumulate are usually redeemable for air travel and hotel stays. You can still redeem them for other things like cash back or credit cards, but the value of the miles will usually decrease.
Cards that offer cash back allow you to earn money back on purchases. The money is either credited back to your credit card or deposited into a savings or checking account.
Rewards points are versatile and can be used in a variety of ways:
- Use points for travel expenses
- Convert points to cash back
- Make purchases with points
- Redeem for merchandise or gift cards
When you apply for a credit card, you should check the terms and conditions of the card’s rewards program. That way you can understand how you can redeem your rewards, what value they have, and how long they’re good for. Additionally, remember that you should only make purchases you can pay in full at the end of the month so that you’re not charged interest.
How to earn more rewards with your credit card this year
With the right kind of strategy, you can make your credit card work for you by accumulating the maximum amount of rewards points. Here are some strategies to help you earn more rewards this year:
Choose a card that gives rewards for your type of spending
Are you loyal to a certain airline? If so, then a co-branded credit card may be a good option for you. Choosing a card that rewards where you spend the most money can help you get the most rewards possible. If you don’t travel, you won’t benefit much from a travel rewards credit card.
To figure out what you spend the most money on, it’s a good idea to go through your credit card statements from the past few years. This should help you pick a credit card that will let you maximize your rewards.
Pay attention to the sign up bonus
Most cards offer sign up bonuses as a way to attract new customers. It’s a great way to quickly accumulate lots of rewards. If a sign up bonus looks appealing to you, make sure you understand the terms of the bonus. To earn the sign up bonus, you need to spend a certain amount of money in a certain amount of time.
See: The surprising place rewards cardholders are getting the most cash back
Just be sure that you’re able to pay off what you spend if you’re going for that sign up bonus. If you don’t, the points might not be worth if you’re paying interest. Also, be sure to understand what purchases qualify for the bonus offer. Some things, like balance transfers won’t, depending on the credit card.
Use your card for your everyday expenses
Using your card for your everyday expenses is another good way to help you get lots of rewards. You don’t have to think about whether or not you’re earning points. You can use the card to pay for things you would have spent money on anyway such as:
- Utility bills
- Grocery shopping
- Streaming services
These things already likely fit into your monthly budget. There are even credit cards that give you extra rewards for some of these spending categories. For example, the Blue Cash Preferred Card from American Express AXP, +0.52% offers 6% cash back at U.S. supermarkets (up to $6,000 spent each year) and 3% cash back at U.S. gas stations. This card does come with an annual fee though.
In many cases, cards that offer more rewards come with an annual fee. Make sure that the annual fee is worth the amount of rewards that you’re getting.
Add authorized users to your card account
Adding an authorized user can also help your rewards add up. Usually, people will add family members like a child or a spouse. It’s important to remember though that you are responsible for paying off the purchases your authorized user makes. Your authorized user should be someone you trust.
Look for opportunities to earn extra rewards
Some credit cards like Chase Freedom and Discover it Cash Back DFS, +0.66% have revolving quarterly categories that offer 5% cash back. These cash back categories include restaurants, gas stations, whole sale clubs, and ride-shares. If you have a credit card that offers cash back on some of these categories, you can try planning your spending throughout the year to get more rewards.
Some rewards portals, like Chase Ultimate Rewards also let you earn extra cash back if you purchase through online retailers when you link your Chase credit card to their sites. There are plenty of opportunities to earn more!
Earning more rewards this year can be easy and put more money back in your pocket. Credit cards that offer great rewards usually require a good to excellent credit score.
This article originally appeared on Credit.com.
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