Key takeaways

  • Rewards credit cards come in many forms, from the types of rewards they offer — such as points, miles or cash back — to the way those rewards are structured — for example, flat rate versus rotating bonus categories.
  • To maximize your rewards card, familiarize yourself with the card’s structure, meet the first-year welcome bonus and explore the value of the card’s redemption options and benefits.
  • Read the card’s fine print to understand caps on category spending and rewards balances needed for certain redemptions, among other details that can limit your redemption potential.

Credit cards are a solid way to get the most out of everyday spending when used wisely. Rewards credit cards in particular allow you to earn points, miles or cash back when you use your card to make purchases — adding up to savings over time with regular spending.

These cards offer a great opportunity to earn rewards on purchases you would have made anyway, and the best credit cards offer rewards with a high earning potential, competitive rates and as few common card fees as possible.

Maximize your rewards by knowing the ins and outs of your rewards credit card and applying seven top strategies to making the most of your card rewards.

1. Match your rewards structure to your spending habits

The best rewards credit card for you should help you make the most of your habits and lifestyle. Because different credit cards reward different rewards on spending, start by clearly identifying what you spend your money on most to maximize your earnings.

If you travel frequently, for example, you might want to compare credit cards that reward cardholders with boosted points, miles or cash back on travel expenses. If you spend a lot on groceries and gas, look for a card with higher earning potential in those categories. If your spending habits are generally mixed, and you don’t tend to spend a lot in any one category, a flat-rate cash back credit card could be an ideal fit.

2. Optimize rewards categories

Check your card stack for the one that offers the best rewards for what you’re spending on. Say you’ve just opened the Blue Cash Preferred® Card from American Express, which offers 6 percent cash back on the first $6,000 you spend at U.S. supermarkets in a calendar year, and then 1 percent after.

If you’ve been paying for groceries with a flat-rate card like the Wells Fargo Active Cash® Card, which offers unlimited 2 percent cash rewards on purchases, you’ll want to use the Blue Cash Preferred instead to earn 4 percent more cash rewards (up to the yearly cap).

Further, issuers like Chase and Discover offer 5 percent rotating bonus category cards that feature new cash back rewards categories every three months. If your new card has rotating bonus categories, you should activate those categories as soon as possible and keep an eye on the rewards calendar so you can plan ahead.

3. Earn your sign-up bonus

Many credit cards come with lucrative sign-up bonuses that can earn cardholders hundreds of dollars in rewards if they meet stated requirements after opening an account. In most cases, credit card issuers require cardholders to spend a specific amount of money during the first few months after opening a card to be eligible for the sign-up bonus.

To ensure you qualify, read the terms of the bonus offer carefully and structure your spending accordingly. The bonus can benefit you financially — you can apply it toward a monthly payment or large purchase, for example.

While you should always borrow responsibly and refrain from spending more than you can afford, the qualifying period for a welcome bonus is a great time to make significant purchases you’ve been planning on.

4. Explore redemption options

Go to the rewards portal for your card’s rewards program to learn more about redemption possibilities. If your card offers cash back, you may be able to choose from a statement credit, direct deposit or a check. If you’re earning miles, the portal will tell you how to redeem those miles for airfare, hotel stays and other benefits. And if you’re earning points, you may be able to choose from gift cards, merchandise, charitable donations and more.

Keep in mind that the value of your redemptions is not always the same across choices. For instance, redeeming for travel purchases might get you a 1-cent-per-mile value, while merchandise might only get you 0.8 cents in value. There could also be a rewards balance requirement to make redemptions, such as a minimum of $25 in cash back earnings to redeem for a gift card.

In terms of travel, points and miles can be worth more when transferred to airline and hotel partners, depending on the partner and rewards currency. Some cards also offer heightened rewards on travel booked through the issuer’s portal, such as the Chase Sapphire Preferred® Card’s 25 percent points boost on travel booked through Chase Ultimate Rewards. Bankrate’s travel toolkit offers more information on using points and miles strategically, as well as general advice on travel credit cards.

5. Take advantage of all your card’s perks

In addition to earning rewards like points, miles or cash back, most rewards credit cards further sweeten the deal with added benefits. Travel credit card perks can include airport lounge access, credits for hotel stays and insurance for lost or delayed luggage. Cardholders can also often take advantage of discounts on Global Entry or TSA PreCheck and travel insurance covering your trip’s interruption, cancellation or delay.

Many cards come with perks related to shopping and entertainment, including extended warranties on items purchased with your card and discounts and special offers for shopping with certain retailers. Cards can also come with features like fraud and purchase protection.

The higher the annual fee, typically the more valuable your card’s perks. Elite or premium rewards cards — cards with fees in the $500 range — come with statement credits toward eligible travel or shopping purchases each year, but you must read the terms closely to ensure you get the full value out of these offers. If you can manage to get the most out of your rewards credit card, odds are you can spend enough to make up for the annual fee.

While many cardholders are understandably focused on the earnings potential of rewards credit cards, it’s worth considering other related perks and benefits when choosing a card. These benefits can often save you money on things you would buy anyway.

6. Pay off your bill in full each month

Putting all of your purchases on a credit card can help you to maximize your rewards. Still, the earning potential of a rewards credit card is typically negated if you carry a revolving balance from month to month. This is because cards with a revolving balance accumulate interest, which you must pay in addition to paying off your existing purchases.

Over time, using a credit card to spend above your means can result in a mountain of debt that’s difficult to climb out from under. While many people understandably turn to credit cards when times are tight, we recommend paying off your entire balance each month, whenever possible. If you avoid carrying a revolving balance, you can take advantage of credit card rewards and benefits without paying unnecessary credit card interest.

That said, you should use your credit card for every purchase, as long as you can pay your bill in full at the end of the month, in order to earn as many rewards as possible. To hold yourself accountable, establish a budget and keep track of your transaction history to ensure you’re on track.

7. Read the fine print

Some issuers have particular rules regarding how retailers are coded and whether or not they fit a bonus spending category. For example, even though you can buy groceries at some Walmart and Target locations, many credit cards won’t reward you for grocery purchases at superstores.

Further, some issuers, such as Chase, add extra value to your rewards points when you redeem them a certain way (like Sapphire Preferred bonus points on Ultimate Rewards travel).

Finally, some cards have difficult processes for redeeming rewards or even limits on how much cash back or points you can accumulate at once. You should pay attention to what kind of redemption offers the most value as well. Cash back, statement credits, gift cards and travel accommodations will have different redemption values based on the issuer’s rules.

In either case, knowing how to convert your spending into rewards is important, and a simple, flexible redemption structure can go a long way.

The bottom line

Credit cards can be a great tool to earn rewards on purchases, as long as you use them responsibly and don’t borrow more than you can afford. Paying off what you owe each month helps you to avoid interest and keep more of your rewards to yourself.

In addition to earning points, cash back or miles, the best rewards credit cards come with plenty of additional perks and card benefits.

While the world of rewards credit cards can sound intimidating, knowing how to maximize credit card rewards in different ways can help you get the most out of your credit card spending.