10 ways to maximize cash back in 2021

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Dear Cashing In,

I haven’t been able to travel much in the past year, so I’ve decided to focus on earning cash back in 2021 in lieu of amassing more airline miles. What do you recommend for maxing out my cash back earnings? I want to know all the tips and tricks. – Bryan

Dear Bryan,

Some people like to say a penny saved is a penny earned, but I like to think of it as every penny earned from a cash back card is a penny saved for your financial future!

After what’s been an ‘off’ financial year for many of us, right now is a great time to focus on putting some cash back in your pocket. And while one penny doesn’t seem like much these days, those pennies certainly add up.

Have a business question for Stephanie? Drop her a line at the Ask Bankrate Experts page.

Try these 10 tips for maxing out your cash back earnings in 2021.

1. Evaluate your spending

Before you switch up your credit card spending strategy or consider applying for a new credit card, it’s important to start by considering your cash flow. How much money are you spending a month? A year? And what are the categories of your biggest expenses? If you don’t actually spend enough money on a credit card each year to cover a credit card’s annual fee, that card might not be the best for you.

2. Find cards that offer bonus cash back in your biggest categories

Once you’ve determined where you actually spend your money, you’ll want to apply for the cash back card that pays you the best dividends for your own personal finance habits. For example, if a large percentage of your money goes to groceries each month, you’ll want to match up this spending with a cash back card like the Blue Cash Preferred® Card from American Express—which gets you 6 percent cash back on spending at U.S. supermarkets (on up to $6,000 in purchases per calendar year, then 1 percent).

3. Adjust spending on any cash back cards you already have

If you already have one or more cash back cards in your wallet, use the information you’ve gathered from your personal finance audit to adjust your spending habits appropriately. Why use the card in your wallet that only earns 1 percent cash back, when another card you have might earn you 3 percent back on the same purchase? Paying just a little bit of attention can easily double or triple your rewards returns.

4. Don’t use just one cash back card

Just like shouldn’t put all your eggs in one basket, it’s smart to not focus all of your cash back earning on a single credit card. While it’s great that you’re earning a high percentage of cash back for your supermarket shopping with the Blue Cash Preferred, you don’t need to settle with just 1 percent cash back on most other purchases. Keep a second card in your wallet, such as the Citi® Double Cash Card, that you can use for your spending that doesn’t qualify for a higher-earning bonus category.

5. Choose a cash back card with a solid sign up offer

If you’re in the market to apply for a new cash back card, do your homework to make sure you’re selecting the best cash back card with a solid sign-up offer and a minimum spending requirement that you’ll easily be able to meet. The Amex Blue Cash Preferred, for example, currently has a solid welcome offer of a $300 cash back statement credit after you spend $3,000 in the first 6 months of card membership. However, if you’re not going to be able to spend that much that quickly, check out a card like the Chase Freedom Unlimited® that pays out a $200 cash bonus after spending only $500 within the first 3 months from account opening.

6. Register for and max out quarterly bonus categories

Some cash back cards offer you earnings at a higher rate for a limited period of time (usually quarterly) in designated categories. Make sure you’re enrolled in these offers and max them out whenever your spending allows. The Discover it® Cash Back, for example, earns 1 percent cash back on all non-category purchases, but also offers 5 percent cash back on up to $1,500 in activated rotating bonus category spending each quarter. Max out Discover’s bonus offer and that’s an extra $75 cash back.

7. Look out for card-linked offers from your issuer

Be sure to stay up to date on any additional rolling bonus offers your credit card issuing bank has for the cash back card that you carry. These offers are normally found in your online account, have limited redemption windows and need to be opted into individually. My Chase Freedom Unlimited card, for example, just sent me an offer for 10 percent extra cash back on Turbo Tax purchases since it’s tax season. This is an easy way to maximize cash back on my tax return. If you want to be notified of new offers, be sure you’re signed up for your card’s email notifications.

8. Use shopping portals and cash back apps

Earn more rewards on every online purchase you make by clicking through a shopping portal for your favorite store, then paying with your favorite cash back card. Cash back sites like Ibotta, Rakutan (formerly Ebates) and Dosh give you a percentage of your spending back on qualifying purchases—on top of the cash back you’re earning on your credit card. You can also earn extra cash rewards by stacking an additional after-purchase step, like scanning your receipts into an app like Fetch Rewards.

9. Use your cash back cards for everything

With a cash back card, the more you spend, the more you earn—so make sure you use your card whenever you make a purchase. This doesn’t mean that you should buy things that you don’t need. But remember the percentage back on every small purchase you make will add up.

10. Decide how you will use your cash back

Using your cash back rewards wisely is just as important as maximizing your cash back earning opportunities. Many people choose to use their cash back rewards as statement credits to offset their monthly spending, however, getting a rebate on money already spent isn’t the only option. Pay yourself forward with your cash rewards by saving up for a big purchase you might not otherwise buy, or invest your returns each month and let your cash back pay you longer-term dividends for the future.

Bottom Line

It doesn’t take a lot of effort to begin putting pennies (and dollars) back into your pocket with cash back cards. Use your cards often and wisely. You’ll be racking in the cash back rewards before you know it!