If you’re using a single rewards card that pays only one point or cent per dollar spent on your purchases, it may be time to rethink your strategy. With three or four carefully chosen cards in your wallet, you can bank enough points and miles to kick back in first-class or lounge in a plush hotel suite. If travel is not your thing—or you don’t want to spend time studying the ins and outs of award charts—you can still earn hundreds of dollars in cash-back each year by rotating your spending among credit cards that match your spending patterns.
Melissa Frank, director of recruitment for an education technology nonprofit, holds nine cards. The Long Island, N.Y., resident delegates different purchases to different cards—for example, all travel goes on her Chase Sapphire Reserve Visa ($450 annual fee). Her points have taken her to South Africa in business class twice, helped treat her dad to a rain forest adventure in Peru, and cut the cost of numerous jaunts around the U.S. “I can’t think of one instance in recent times that I have paid full price out of pocket for a flight,” she says.
Whether you want to dabble in credit card rewards or dive in deep, these five strategies will help you milk more value from your points and miles. You can combine tactics to earn even greater rewards. (Unless noted otherwise, the cards we recommend do not carry annual fees; for additional picks in a variety of categories, go to kiplinger.com/links/cards19.)
Don’t worry that strategies to max out rewards will lower your credit score. That won’t happen as long as you avoid a few common traps. In fact, your credit score may go up (see the box on the next page).
1 Concentrate on cash back
BEST IF: You want an easy and instant return, value total flexibility with your rewards, or travel infrequently.
Cash back may not have the panache of high-end travel rewards, but it’s simple, versatile and doesn’t lose value over time the way that loyalty points do. Among credit card users who say rewards are the feature they look for most in a credit card, 67% favor cash back over points or other reward types, according to a report from CreditCards.com.
Miguel Suro, a lawyer in Miami, and his wife, Lily, divide their spending among three cards: Amazon Prime Rewards Visa Signature, for 2% back on gas and 5% back on Amazon.com purchases; Citi Prestige Mastercard ($495), for five points per dollar spent on dining; and Chase Freedom Unlimited Visa, for 1.5% cashback on everything else. But he and Lily are rethinking the strategy because no-fee cash-back cards with generous rewards make more sense for them as new parents. “When you first read about travel hacking, you’re excited by the promises of amazing trips around the world in first class. But it takes a lot of time and energy to research,” he says. “Now that we are traveling less and buying lots of baby stuff, cash back is more attractive.”
The easiest method to rev up your cash-reward rate is to rely on a single card that earns more than 1% per dollar spent. CITI DOUBLE CASH MASTERCARD pays a flat 2% on all purchases, as does the FIDELITY REWARDS VISA SIGNATURE (but you must deposit your rewards from the card into a Fidelity account). Other cards, such as the CAPITAL ONE QUICKSILVER VISA, return 1.5% on everything.
Next, layer on one or two more cards with higher payback in categories in which you spend the most, such as dining, groceries or gas. Dining is a hot category right now, with several cards, including the UBER VISA and CAPITAL ONE SAVOR REWARDS MASTERCARD ($95 annual fee, waived the first year), earning 4% or more at restaurants.
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