Some of the links on this site contain offers from our partners.
Credit card rewards can be a great way to get some extra cash back, earn discounted travel and more. To make the most of their rewards, credit card enthusiasts employ sophisticated ways to squeeze as much value out of each point and mile they earn.
But if you’re new to credit card rewards, the learning curve can be overwhelming. What’s more, many points and miles experts focus on niche redemptions, such as international business-class flights and luxury hotel stays, which often require a lot of rewards and complex strategies.
If you’re not interested in getting deep into the weeds of “travel hacking,” but you still want to take advantage of credit card rewards to improve your life – and your finances – these stress-free approaches can help.
7 Basic Ways to Make the Most of Your Credit Card Rewards
Learning all the tips and tricks that experienced credit card enthusiasts use can take months or even years. Whether or not you’re interested in developing those skills in the long run, here are some approaches you can take to your credit card rewards that don’t require a lot of experience or complexity.
1. Pick a Card That Matches Your Spending
Some credit card rewards programs are arguably better than others because they offer more flexibility and more valuable redemption options. But redemption is only one piece of the puzzle with cash back, points and miles.
As you try to determine the best way to earn rewards, focus on the cards that best align with your spending and preferences.
If you don’t spend a lot in those categories, the card may not make sense for you. Instead, you may consider the Capital One Venture Rewards Credit Cardwhich offers a flat 2 miles per dollar on every purchase – double the base rate of the Sapphire Preferred.
And while redemption options and values can vary between those two cards, the latter option may be more appealing to you if you prefer a simpler approach to rewards.
“Look at your year-end statement from last year to determine which category you typically spend the most, and then find a card that matches that,” says Andrea Woroch, a consumer and money-saving expert and a US News contributor.
Take your time to shop around and compare several rewards credit cards before deciding which one is best for you.
2. Consider Your Financial Situation
A lot of credit card rewards experts live and die by travel rewards, and the deeper you get into your strategy to maximize rewards, focusing on travel rewards might make sense.
But if you’re just starting out, it might be a good idea to consider cash back credit cards instead. With cash back, you can use your rewards for anything you’d like, including:
- Paying off debt.
- Building your emergency fund.
- Saving for retirement.
- Covering necessary expenses.
You can also consider your cash back rewards as your “fun money,” allowing you to use more of your income for necessities and important financial goals.
Before you apply for a cash back credit card, though, make sure you understand your redemption options. Some credit cards may only allow you to get statement credits on your credit card account, which gives you less flexibility with your cash back rewards. Consider a card that offers direct deposit or even a paper check, so you can truly use the cash how you want.
3. Treat Yourself With Gift Cards
Many credit card rewards programs, including cash back, points and miles programs, allow you to use your rewards to buy gift cards to popular retailers and restaurant chains.
If you want to treat yourself to a movie and dinner out, add to your wardrobe or do some shopping, you can choose among dozens of gift card options. And while you may be able to get more value from your cash, points or miles in another way, it’s more important that you use your rewards to enrich your life in the way that you want.
Woroch says it can even be worthwhile to redeem travel rewards for gift cards if you don’t have any travel plans and your budget is tight. “You can use those gift cards to help pay for a big-ticket purchase or as a gift for an upcoming celebration when you’re short on cash,” she adds.
Keep in mind, though, that redemption values can vary with gift cards. In many cases, you can use cash back to buy a gift card at cost – for example, a $ 25 gift card in exchange for $ 25 in cash back – or get one for 1 cent per point or mile, which is a standard rewards redemption rate .
However, some may only give you 0.8 cent or even 0.5 cent per point or mile in value. If a certain gift card gives you a subpar value, that doesn’t necessarily mean you shouldn’t get it, but it should cause you to think twice and consider an alternative option.
4. Focus on Limiting Travel Expenses
If you have a travel rewards credit card, your points or miles can allow you to save hundreds or even thousands of dollars on travel.
For example, you can book a flight and only pay the taxes and fees, book a hotel stay and only pay the parking fees or get a rental car, cruise or other travel experience and pay little to nothing at all.
Many travel enthusiasts obsess over getting as much value out of each point or mile as possible, and luxury redemptions such as international business-class flights can offer far more value per point or mile than other redemptions. For example, if a business-class seat costs $ 6,000 or 150,000 miles, you’re getting an impressive 4 cents per mile in redemption value.
But what many of these travel experts gloss over is that they’re often earning rewards at a much higher rate than most people, so shelling out 150,000 miles for a business-class flight may just put a dent in their rewards balance.
If you can get five or more economy flights with that same 150,000 miles, you may not get a swanky experience, but you’d be getting more value in the form of more experiences. Economy is also usually the way to go if you’re booking for multiple people, says Nicolette Kay, travel expert and founder at Semi-Budget Travel.
So, even if you’re not making the most of your travel rewards in terms of redemption value, you’re still winning by focusing on limiting your travel expenses.
5. Focus on Redemptions That Make Sense for You
You’ll hear a lot of opinions about which redemptions are the best, and that list can vary depending on the rewards program.
But while some redemptions may be better than others in terms of how much value you can get per point or mile, it’s important to focus on what makes the most sense for you.
For example, the best way to use hotel points is generally to book award stays at the loyalty program’s properties. But you may also have the opportunity to redeem your rewards for excursions at your destination, spa services and more.
Think about the type of experience you want to have, and use that to help you decide how to redeem your credit card rewards.
6. Avoid Paying Interest
Credit card rewards can incentivize you to use your credit card more often, but if you’re not careful, you could end up overspending. If you spend more than you can afford to pay off, you’ll end up paying interest, which can neutralize the value of your rewards.
As a result, it’s important to create a budget and track your spending so you don’t get into financial trouble and end up paying more in interest than you’re getting in value from the rewards.
7. Use Up Your ‘Orphan’ Points and Miles
If you stop using one credit card in favor of another, you may not be able to use up all of your rewards in one go. If you have a few thousand points or miles left and don’t plan on earning more – at least not at a fast enough rate to matter – research ways you can use them so they don’t go to waste.
For example, some rewards programs allow you to use these “orphan” miles to buy merchandise or get magazine subscriptions. They may not be the most valuable redemption options, but you’re still getting something from them.
Don’t Be Afraid to Adjust Your Rewards Strategy
Over time, you may learn more about how you can make the most of your credit card rewards, and your earning potential and redemption preferences can change. Don’t be afraid to reevaluate your approach to credit card rewards now and then to ensure that you’re still maximizing your rewards in a way that makes the most sense to you.
“I would suggest that you just get one card to begin with. Choose the card that seems most likely to help you accomplish your goals,” says Kay. “Use that card to actually work towards and accomplish those goals. Then, take stock, and decide if you want to branch out to other cards.”