Recently, I shared with you five easy ways to use credit cards wisely.
While these tips are valuable, they just begin to scratch the surface of the knowledge that true reward card gurus use to profit from their credit cards.
If you want to move beyond the fundamentals and experience some of the power of reward credit cards, keep reading. Here are my advanced credit card rewards tricks and techniques.
1. Carry a Balance and Still Earn Rewards? Maybe
One of the cardinal rules about reward cards is not to try to earn rewards while carrying a balance and paying interest.
The reason? Reward cards have much higher interest rates (compared with low-interest rate cards). So it would be foolish to try to earn rewards when you have a balance you are paying down.
There is one exception.
If you travel for work and are reimbursed by your company, you may want to get a separate rewards credit card that you will only use for reimbursable work travel expenses. Keep your personal balance on a low-interest card.
This way you can earn some credit card rewards through your work spending, which you can subsequently pay off when the company sends you a check, and you’ll never pay high interest.
As an example, let’s say that a user has card A and they carry a balance each month. Every charge they make incurs interest from the moment the transaction goes through. So when they charge a hotel on a business trip, they pay interest on that charge (no company will reimburse you for that).
Same user gets card B and only uses it for reimbursable expenses. Company issues the user an expense check each week, which is used to pay card B in full before the next due date. No interest is accrued and the user gets reward points or miles.
2. Use Gift Cards to Shift Spending
We have all seen the reward cards that offer double, triple, or even 5x reward when spending in certain categories. Sometimes, the categories are fixed, while other cards feature categories of spending that rotate every quarter.
It is never smart to spend more to earn rewards, but fortunately, there is an easy way to maximize these bonus opportunities even when spending outside those categories.
For example, the American Express Blue Cash Preferred offers 6% cash back at grocery stores. There, you can purchase a variety of gift cards not just for other merchants, but debit cards from Visa, MasterCard, and American Express that work anywhere.
Other merchants that offer a variety of gift cards include drug stores and office supply stores.
3. No Business? No worries.
Every now and then, I see a great sign-up bonus from a credit card company. In those situations, I feel compelled to get both the personal card and the business card. Do I have a business? Uh, kind of, but who cares?
Can you apply for a business credit card? Sure you can. Simply enter your Social Security number for the Tax ID number and use your name as the company name, just as any sole proprietor would. There is nothing wrong with doing this for any reason.
For example, I have received the personal and business version of the Southwest Airlines card, which helped me to earn their valuable companion pass.
4. Earn Flexible Reward Points
Everyone who earns airline miles knows what it feels like to save up for an award, only to be told that none is available at the lowest mileage rate. Thankfully, there is one way around this problem.
When you have a credit card that earns points in a flexible rewards program, you can transfer them to miles with the carrier of your choosing. For example, the Chase Sapphire Preferred earns Ultimate Rewards points which can be transferred to United, Southwest, Korean, and British Airways.
When you consider that United, Korean, and British miles can be redeemed for flights on their Star Alliance, SkyTeam, and OneWorld partners. This covers virtually every major airline in the world, rather than locking you into one carrier.
Other flexible points include American Express Membership Rewards, the points earned from the Starwood Preferred Guest card from American Express.
5. Spend the Rewards Wisely Too
The reason that I get so much value out of my credit cards is not just that I earn tons of points and miles (I do), but that I take great care when spending them. It all boils down to the number of cents in value I get for each dollar spent.
For example, before redeeming miles for a free flight, I will see how much it would cost me if I paid cash. If I can find a round trip for $250, I won’t bother to redeem 25,000 miles as I would only be getting one cent in value per mile.
I look for values in the 2-5 cent range and quickly jump on any deal that returns more than 5 cents per dollar spent. Thankfully, these awards typically include business class, international airline seats and luxury hotels.
Looking for more tips? Check out this Google Hangout we did on the subject:
You can view credit card rewards as simply a nice little perk for your loyalty, or you can take them seriously and squeeze all the value you can out of them. By earning the highest quantity and quality of points, and by spending them wisely, you can enjoy more reward that you might have thought possible.
Have any advanced credit card rewards tricks of your own to add?