My Secrets for Racking Up Credit Card Points

You know that credit card debt can put a serious hit on your financial future, but that doesn't mean you should write off credit cards completely. In fact, if you can qualify for a rewards credit card, it can serve as a smart tool to reduce your bottom line and pay for fun extras. These are my tried-and-true tricks to make the most of my credit card rewards without paying unwanted fees and interest.

Boost Your Credit

If you don't have a FICO score of at least 700, you won't qualify for the best credit card rewards programs. Before you begin to apply for cash-back cards, take steps to improve your credit score. You should pay your bills on time every month, reduce the amount you owe on your existing credit cards and dispute incorrect information on your credit report.

Know the Programs

When you're ready to shop for a rewards credit card, find a program that makes sense for your lifestyle. Some cards offer points on essentials like groceries and gas, while others offer cash back on everything. You might also want to look for perks like a sign-on bonus for spending a certain amount in your first few months as a member or a card that's free of annual fees. While many people sign up for credit cards on a whim, doing careful research ensures that you'll benefit from the relationship rather than losing money on the deal.

Once you settle on a card, review the documentation about the rewards program carefully. Make sure you understand:

  • How you will receive rewards, whether that means cash back, airline miles or points

  • The value of rewards, often a flat amount for every dollar spent or a percentage of purchases made with the card

  • How you can redeem rewards

  • The minimum amount of rewards that can be redeemed

  • Whether rewards expire if unused

I prefer cash-back cards since they pay up to 5% on my purchases to spend however I like. I can make a direct deposit to my bank account, request a paper check or even invest my rewards in the stock market.

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Start Using Your Card

That doesn't mean going on a spending spree. I maximize my credit card rewards by charging bills and everyday purchases whenever possible. Since I'm already buying dog food, paying for groceries and booking a vacation for next summer, why not earn cash back or points as part of the deal? Some of the bills you can pay with your credit card may include:

  • Health insurance premiums

  • Medical bills

  • Car loans or leases

  • Utility payments

  • Online subscriptions

  • Cable and internet service

  • Cell phone service

Some cards have a rotating bonus program where they pay extra cash back in a different category each month. If your card has this type of program, take advantage by timing major purchases to coincide with the appropriate category bonus.

Avoid Extra Charges

The most important step in the process of earning credit card rewards? Pay off your rewards credit card balance in full every month. Otherwise, you'll be paying so much in interest that your rewards will be virtually worthless. Using just one rewards card is usually the best option, but some people opt for a cash-back card as well as a specialty card for an interest area like restaurants or travel.

Before paying a bill or making a purchase with your credit card, figure out the fee you'll pay for doing so. If the percentage exceeds your reward amount, use a free payment method instead.

Every so often, review the terms and conditions of your credit card rewards to make sure you're still coming out ahead. If you receive communications about changes to your account, read them carefully and change your habits accordingly.