How to Maximize Credit Card Rewards

Cat Collins

Writer

According to a 2022 Wells Fargo study, over 70% of Americans have a credit card with rewards, but 13% say they don’t understand all their card's benefits. If you’ve been dazzled with stories of people going on exotic vacations with points but are confused about how to maximize yours, you’re not alone.

Luckily, there are a few steps you can take to ensure you choose the right card for you and understand the rewards it offers.

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  • Keep track of your spending habits to determine the right card for you.
  • You'll need good to excellent credit to qualify for the best rewards credit cards.
  • Determine what your goals are and focus on one — this might be travel rewards or cash back
  • If you prefer a specific hotel or airline, you might want to consider a co-branded card.
  • If you prefer cash back, look for a card that has bonus rewards in the categories where you spend the most.

Maximize Credit Card Rewards: Review your spending habits

In a world of subscriptions and auto-drafts, it can be easy to lose track of how much you spend each month. In fact, according to a survey by Mint, 65% of Americans don’t know how much they spent last month. 

So, before deciding which credit card rewards are best for you, analyze your spending from the past two to three months. Keep an eye on where most of your money goes, whether it’s travel, groceries, gas, or hobbies. Use this information to decide what type of card would help you maximize your priorities.

Knowing your spending habits will allow you to choose a rewards credit card that has bonus points in categories where you spend the most. For example, if you spend a lot on groceries but not a lot on travel then you'll want to look for a card that earns bonus points at supermarkets but not necessarily on travel purchases.

Being able to make the most of bonus categories is key to maximize rewards.

Maximize Credit Card Rewards: Review your travel habits

If you want to earn travel rewards then understanding your travel habits is important. You'll want to know which airlines and hotels you prefer. Do you want access to airport lounges and will you take advantage of perks like Global Entry credits.

If there is a specific airline or hotel chain that you love, you may want to consider getting a co-branded card that will give you extra rewards or elevated status to their loyalty programs just for having the card.

If you are more flexible, you may want to participate in a rewards program that allows you to transfer your points to airline and hotel partners, such as the Chase Ultimate Rewards program.

Or maybe you don't travel much at all and would prefer to get cash back instead of points and miles.

Related: Best travel credit cards

Maximize Credit Card Rewards: Know your credit score

Many rewards cards are specifically for consumers with good or exceptional credit scores. This range includes FICO scores between 670 and 850. Lenders use a variety of factors when determining whether or not to extend credit to you, including your education level, income, credit score, and even whether you already have a credit card with them.

You can check your credit score in a couple of different ways. There’s no need to pay to see it. You can use a service like Credit Karma or Credit Sesame to check your Vantage Score for free, giving you a ballpark idea of your FICO credit score.

If you already have credit cards, check to see whether or not seeing your FICO score for free is one of the perks they offer.

If you don't have good to excellent credit, you will probably want to focus on improving your credit before applying for a rewards credit card.

Maximize Credit Card Rewards: Decide on your goals

Most people have a reason they want to pursue credit card rewards. Maybe Tahiti is calling your name. Or, perhaps, you want to take your family on a nice vacation. Maybe you just want credit card rewards to earn chase back on everyday spending, like groceries and gas.

If you want to earn free travel on a specific a hotel or airline you'll want a card that will earn rewards on the desired hotel or airline loyalty program. You can often find cards that also give your higher status on your desired program.

If you like keeping it simple, there are numerous cash-back rewards cards that give you back a percentage of the money you spend annually. Data from Lightspeed Financial Service Group shows that in 2021, cardholders who had cash-back credit cards earned $278 back on average.

Whatever you want to pursue, you’ll be more likely to reach your goals if you write them down. Choose one to focus on to make sure you maximize your points and rewards.

Woman holding phone and credit card making money transactions online. Guides to maximize credit rewards.

Maximize Credit Card Rewards: Research credit cards

There are several factors to consider when choosing a rewards credit card to maximize the rewards they offer. Here are some tips on what to look for when researching rewards credit cards.

Welcome bonuses

Many rewards cards have a sign-up bonus, but to qualify you'll have to reach a minimum spend in a certain amount of time from account opening. Before signing up for a card with a large welcome bonus, make sure you can make the minimum spend required to get the absolute most for your rewards.

Rewards categories

Many rewards credit cards let you earn bonus points in certain categories. Some even have rotating bonus categories where the bonus categories change each quarter. To really maximize these rewards you'll need keep an eye on what the bonus categories are each quarter.

Also, you typically need to activate the rewards each quarter in order to participate in the rotating categories.

Annual fees

Annual fees can take a big bite out of any rewards you may be earning from rewards credit cards. The cards with big annual fees, such as the Chase Sapphire Reserve, often offer an annual statement credit to offset travel expenses. You'll want to make sure that you can take advantage of these credits or the annual fee may not be worth it.

Additional perks and benefits

It’s also worth noting any other perks and cardholder benefits credit cards offer, like rental car insurance, free checked bags, airport lounge access, and more. Reading the card's fine print is one of the best ways to ensure you’re maximizing your credit card rewards.

Related: 7 types of credit cards

Final thoughts

Although credit card rewards might seem confusing at first, with enough time and planning, you can enjoy your credit card rewards in a variety of ways.

Whether you want to save money on gas or take your family on a free vacation, there are numerous credit card rewards to choose from.

Remember, rewards are not worthwhile if you carry a balance on your credit card. The average credit card interest is just over 20%, so any gains you make in travel points would pale compared to interest payments over time.

However, if you have good credit card habits and pay your cards off in full each month, earning credit card rewards can help you reach various financial and personal goals.

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Author picture

I'm an award-winning lawyer and personal finance expert featured in Inc. Magazine, CNBC, the Today Show, Business Insider and more. My mission is to make personal finance accessible for everyone. As the largest financial influencer in the world, I'm connected to a community of over 20 million followers across TikTok, Instagram, YouTube, Facebook and Twitter. I'm also the host of the podcast Erika Taught Me. You might recognize me from my viral tagline, "I read the fine print so you don't have to!"

I'm a graduate of Georgetown Law, where I founded the Georgetown Law Entrepreneurship Club, and the University of Notre Dame. I discovered my passion for personal finance after realizing I was drowning in over $200,000 of student debt and needed to take action-ultimately paying off my student loans in under 2 years. I then spent years as a corporate lawyer representing Fortune 500 companies, but I quit because I realized I wanted to have an impact; I wanted to help real people and teach them that you can create a financial future for yourself.

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Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.

Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.

Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. This in no way affects our recommendations or article content.