Tips to Maximize Your Credit Card and Free Travel Rewards


Credit card use can get a bad reputation at times, but plenty of people are able to use credit cards responsibly and to their advantage. The convenience of credit cards, combined with the robust rewards systems many cards offer, can actually benefit you financially.

By learning a few tricks of the trade, you can maximize the benefits of your credit card rewards. Choosing the right cards for you and paying attention to the reward programs could net you several hundred dollars—or more—every year.

How to Maximize Your Credit Card Rewards

First let’s look at general credit card use. Here are a few tips to maximize your credit card rewards.

1. Understand Your Spending Habits

It’s a smart move to think about the type of spender you are. Don’t rush out and grab the first credit-card offer you see.

Here are a few questions to consider when deciding on the best rewards card for you:

  • Do you travel a lot?
  • Do you spend much on hotels and flights?
  • How much do you spend on gas for driving?
  • How often do you eat at restaurants?
  • Do you shop only at a specific grocery store?
  • Do you spend a great deal on other categories?

There are no right or wrong answers here. You just need to examine your spending habits to determine the type of rewards cards that would benefit you the most. For example, if you don’t really travel much, a travel-specific rewards card might not make sense. Or if you take public transit to work every day, a gas station rewards card won’t be your best option.

2. Skip Cards With Annual Fees (In Most Cases)

Look at what it costs to have a card. For a lot of us, paying $95 or more for the privilege of carrying a specific card might not be worth it.

In general, you want to avoid opening up a card that charges an annual fee, unless you know for sure the rewards will outweigh the cost. There are plenty of free rewards cards out there.

So do a little simple math. Calculate your annual spending, figure out the percentage you’d earn in rewards, and compare that to the annual fee. In some cases, the perks of a particular card might be worth the added cost. Just do your homework before picking a card with an annual fee.

3. Don’t Spend Money Just for the Rewards

This is credit-card gospel here. You should never run up credit card bills all in the name of getting more in rewards. That’s like those store sales that say “the more you spend, the more you save!” You still have to be aware of the actual amount of money you’re spending.

Credit card rewards are not free money. Think of them as a way to get the most out of purchases you’d be making anyway.

Remember that the goal here is to get cash back and other rewards based on money you would spend no matter what. Things like gas and groceries are great items to put on rewards cards. They’re necessities, so you may as well get something in return

4. Absolutely No Balances…Ever!

Readers here are pretty money-savvy, so this may go without saying, but you should not carry a balance from month to month.

Occasionally, troubles come up that may lead you to put extra expenses on your credit card. But in general, you should always pay off your credit card in full each month and avoid debt.

Whenever you carry a credit card balance, it signifies you’re spending money you don’t have. You’ll end up losing additional money in interest charges (which can be astronomical). Just like the annual fees, paying interest cuts swiftly into any reward money you might have earned.

Related: 17 Winning Tips & Tricks To Legally Eliminate Credit Card Debt (For Good!)

5. Be Smart About Redeeming Rewards

Another tip to optimize your credit card rewards: be smart about when and how you redeem them. Read the rewards information provided to learn how the company distributes rewards.

Some credit card companies use a tiered system, paying a higher reward percentage when you’ve reached a higher level. In other words, your points are worth less in rewards when you redeem them too soon. Wait until you can receive the maximum rewards rate.

Pay attention to when or if your points expire. You’d hate to accumulate tens of thousands of points only to discover that they’ve expired and you get nothing!

Pay attention to various rewards categories, too. Many cards operate on the basis of rotating rewards categories, where there’s a flat rate of 1% on all purchases all the time, but at certain times, specific categories net you a higher percentage, like 5%.

January through March might offer bonus rewards on spending at gas stations, but April through May might be department stores. Watch for changes in your bonus categories to help you time your purchases to be most advantageous to you.

If you just want simplicity, a basic cash-back rewards card may be best. This is if you don’t spend a ton on travel or any specific categories. And if you don’t feel like keeping track of ever-shifting bonus categories, a straight cash-back card with a higher percentage for purchases across the board may be best.

Another strategy is to check whether your card has a rewards portal on their website that enables you to get more for your available points. Often, cards will give a discount on gift cards or travel purchases made through their portal. This is a great way to get the most out of your credit card rewards.

Tips Summed Up:
  • Read the rewards program information carefully
  • Watch out for expiration of points and other fine-print issues
  • Pay attention to rotating rewards bonus categories
  • Look for discounts on the card’s shopping website
  • Use a basic cash-back card for simplicity

How to Maximize Free Travel Rewards

Now that we’ve covered basic credit card rewards, let’s get into the details of one major credit card use: travel expenses. You’ve probably heard of travel hacking. There are plenty of ways you can gain free travel rewards by being a savvy credit-card user.

Negatives of Travel Rewards Programs

Some airline and frequent-flyer rewards programs have a bad rap, and for good reason. Many travel cards promise amazing travel rewards like free flights, but then leave you with so many blackout dates and other limitations that the rewards don’t benefit you that much.

Some travelers have been lured into a rewards program by the appeal of free flights, only to discover that the locations or dates they want are always booked, or the booking fees and surcharges tacked on make the “free” flight cost just as much as without the rewards. So it’s important to read the fine print and check the customer reviews of travel programs before signing up.

3 Ways to Earn the Most Miles

1. Go For the Big Signup Bonus

Signup bonuses are an awesome aspect of good rewards credit cards. Often you can earn a significant amount of bonus points that are worth cash or other rewards, just for reaching a certain spending minimum in the first three months of usage.

In some cases, you may be able to open both a personal and a business card with the same company, thus gaining the signup bonus for each account. However, proceed with caution! You need to monitor all of your cards closely and cancel before the annual fee is due, if necessary.

When signing up for a card for a bonus, it’s also crucial to be sure you can actually meet the criteria for the bonus. If a card requires you to spend $10,000 in the first three months, but your normal expenses never come near that amount, you may as well not get that card. As long as the required spending is at a level you can reasonably meet, a signup bonus is a sweet deal.

Learn More: Travel in Style with Freelancer and Credit Card Expert Jason Steele

2. Maximize Bonus Spending Categories

As discussed earlier, you always want to focus your spending so as to maximize the bonus spending categories. Sometimes you don’t have control over this, but if you can hold off on a major purchase like a new appliance until the bonus period arrives, you could earn a much higher rate of rewards.

If using a card with rotating bonus categories, be sure to keep track of when the categories change. Aim to buy items when they coincide with the highest rewards rate if possible.

3. Complain When Necessary

When airlines or hotels mess up, be sure to file a complaint with their customer service folks. This isn’t selfishness on your part—it’s simply making sure the company knows if they provided poor service and need to improve.

The potential benefit to you of complaining: the company may compensate you for your trouble. You could get free travel, meals, or other perks just because you complained. Don’t make up a complaint, but if you didn’t receive the service you expected, you shouldn’t be afraid to speak up.

4 Ways to Spend Your Miles Wisely

If you’re focused on travel rewards, you want to make the most of any miles earned through your rewards card. Check out these 4 tips for spending your miles wisely.

1. Think In Terms of Partners

Airlines can be incredibly stingy with their award seats at the lowest mileage levels. And while they often have extensive partnerships with other airlines, they rarely display these options to you when you’re searching online.

You could spend all day searching online for a great price on a flight to Europe, but come up with only a few seats available for a low reward amount. If you make the effort of a phone call to the airline, their agents might search for awards on their many partner airlines. So be creative and look for another way to find your best rewards.

2. Look For Luxury

Getting value from your miles is all about getting the most cents per mile or per point spent. One of the fortunate quirks (or perks) of these programs is that luxury hotel suites and premium international travel seats actually return more value per point. Flying coach and staying in budget hotels won’t always get you the best value on your miles.

For example, a business class international ticket can cost around 4-10 times the amount of a coach flight. But redeeming miles for an award seat in that class may only cost around 50-100% more. This isn’t a rule set in stone, but something to consider when shopping around for travel experiences.

3. Go Far

Americans are unique and lucky in that we can earn all sorts of miles from credit cards, hotels, and other partner promotions. The rest of the world usually has to actually travel to earn miles.

Look for flights to the locations that offer the best rewards and the best seat availability. This might mean traveling overseas rather than domestically, to get the best bang for your buck. Basically, search different locations to find the best travel options for you.

4. Use an Award Booking Service

It can take hours of frustrating searches to find an available flight that uses your points or miles. Fortunately, there are experts in this field who can not only do this legwork for you, but also use tricks that you wouldn’t know about otherwise.

Award booking services may not be cheap, but can be well worth it if you’re flying internationally in business class.

A little creativity and extra effort with credit card rewards can be well worth your time when you’re settled in comfortably on a flight to a great destination.

Protect Yourself Online With Privacy.com

All this talk of credit card use for rewards wouldn’t be complete without considering the safety of using a card online. The security of your money isn’t something you can ignore these days, especially online.

Privacy.com helps protect you from hackers while shopping online. Their personal plan is free to use, with no hidden fees. Basically, it generates a new credit card number you can use for every new transaction. That number may only be used one time, with one vendor.

Your financial and personal security are better protected when you shop with Privacy.com because shady characters can’t steal your card information and run up huge credit card bills in your name. Even if they are able to lift the card number, it’s useless after you’ve paid with it once.

You may be wondering how Privacy.com can offer this as a free service. They make money from a small “interchange fee” that merchants and websites pay. It’s completely free for the consumer, though you can upgrade to a paid plan that enables more card numbers and other features. For most of us, the free personal plan is sufficient.

Another great perk of using Privacy.com when shopping online is that it makes it easier if you need to cancel a subscription. We’ve all had that experience of trying to call or navigate a website to cancel a recurring service. Those sales reps don’t want to lose your business!

But if you use Privacy.com when you sign up, canceling a subscription is a breeze. The company won’t be able to charge you again month after month.

Benefits of Privacy.com:
  • Free for up to 12 card numbers per month
  • No interest or annual fees
  • Bank-level security
  • Unique card numbers for every transaction
  • Spending limits per transaction, per month, or per year
  • Generates card numbers that only work once
  • Simple browser extension
  • Easily cancel subscriptions

Final Thoughts

Don’t leave money on the table. When you’re smart about credit card use and rewards programs, you maximize your potential earnings. Remember to use credit cards wisely and look for the best ways to get free travel and other rewards.

Need more tips for making the most of your reward card efforts? Check out this video we made:

I know I have some very skilled readers who optimize their credit card rewards far better than I could imagine. Please share your tips below.

Photo by Webaroo on Unsplash

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.

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  1. DoughRoller says

    I didn’t realize that some cash back cards pay out at different rates depending on how much you redeem.  I don’t think my cash back card works that way, but it’s good to know for those cards that do.  Nice catch!

  2. banking deal community says

    I currently have a Bank of America credit card in which I earn no rewards from using. Because I’m starting to use it more and more, I’ve decided it’s time to switch to a credit card where I can earn rewards. I’m wondering if people have suggestions on the best credit card to get based on the rewards/incentives associated with it?

    • Philip Taylor says

      You can find my recommendations here: https://ptmoney.com/credit-cards/

    • Discover has a pretty good rewards program.  Some of their business partners allow you to purchase their gift cards at reduced costs.  For instance, you could purchase a $25 gift card for $20 in cash back rewards.  You could also redeem your cash back in other ways.  Check out the discover.com website.  
       
      Another card I use is the Amazon Visa.  You accumulate points based on your purchases.  Depending on the type of purchases you make will dictate the points you earn.  Check out their points program online.  You could use your points to make purchases on Amazon, receive cash back, or apply it in other ways, such as travel, dining, etc.  
       
      Good luck. 

  3. wow, thanks so much for that great info. i didn’t know about that website.

    i guess i was under the impression that each person had a fixed amount of “available credit” and if you reach that amount they start denying you for cards, so i figured i’d cancel a few and give myself some room to get my limit increased on the other card. but it doesn’t work that way, i realize now.

    i have 5 cards and i won’t cancel any of them. and i will call american express and ask them about raising my limit.

    thank you again!!!

  4. @zach

    I would strongly advise against cancelling your other cards for two reasons:

    1. Credit History – These cards show your credit history and prove that for quite some time people have trusted you to pay your bills and be a responsible borrower. You don’t want to erase that history by cancelling the cards.

    2. Available Balance – Even though you aren’t using the cards, having an overall high available balance improves your credit score. By cancelling your other cards you would be lowering your available balance. Not a good thing.

    To increase your AmEx credit line I would just call them and ask. If they say they can’t, ask them when you should call back and ask again. Overtime they will increase your limit. Especially if you’re using the cards each month and paying it off.

    For more on this, I would do some research at http://www.nfcc.org/

  5. i have a somewhat related question…

    i’m paying off my credit cards, and have a little ways to go, but once i have them all paid off, i plan on only utilizing my american express blue cash card, and putting my utilities and regular purchases on that card, and paying off the balance monthly.

    i have other cards open right now (currently with balances, but everything will be paid off within 6 months), and several of these cards have limits in the thousands, one of which is $10,500 and another is $5,000.

    ideally i’d like to get my limit increased on my blue cash card, which is currently at $2,000, because it’s the only card i want to use. would canceling my other cards, waiting a few months, and then requesting a credit limit increase on my american express card be the way to go about getting my $2000 limit upped?

    i should note that when i applied for my american express card, my credit scores were in the 670 range. now, they’re between 700 and 720.

    thanks for your advice! and i love your blog. you talk about real issues that real people have and it’s really invaluable. 🙂

  6. Thanks for this great advice. Sometimes we so caught up in the “credit cards are evil” mentality that we forget that, when used properly and responsibly, there are some great benefits.