How to Maximize Credit Card Rewards

Using credit cards can be a great way for responsible spenders to earn a little extra from your spending or even pay for a vacation or two.
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by CJ Miller, CFP, RMA

The world of credit card rewards is constantly growing. With a plethora of options available, it is difficult for most consumers to know where to start. Some may even think that using credit cards is not worth the hassle at all. That said, using credit cards can be a great way for responsible spenders to earn a little extra from your spending or even pay for a vacation or two.

There are three major “categories” for credit card rewards. The simplest and most common is cash-back. With these credit cards, you earn a percentage of your spending back as a cash reward. Some are general across all spending, while others offer higher cash-back rates for specific categories like groceries, restaurants, or travel.

Another popular category of credit card rewards is Points and Miles. These credit cards are tied to a retail or travel loyalty program, and award points/miles that can be redeemed for rewards. There are brand-specific programs (most major retailers offer a credit card), and there are also “flexible” reward programs that can be redeemed in a variety of ways, like American Express Membership Rewards and Chase Ultimate Rewards points.

The last category of credit card rewards is common among luxury credit cards, like the American Express Platinum Card or the Chase Sapphire Reserve card. These cards typically offer “spending credits” to offset the annual fees associated with the cards. For instance, the American Express Platinum card offers $200 per year in credits for Uber purchases. This can certainly help take the sting off the $550 annual fee!

Looking to maximize your credit card rewards earning? Start with the tips below:

· Utilize sign-up bonuses – most credit cards offer very generous bonuses that would be hard to obtain with everyday spending. But, make sure you can meet the minimum spending requirements before applying!

· Use blogs like The Points Guy, Doctor of Credit, and Flyer Talk to learn about the landscape of loyalty programs, reward point valuations, and how to best redeem them.

· Set a redemption goal and strategize BEFORE applying for cards to ensure you leverage the optimal programs for your goals.

About the author: CJ Miller, CFP®, RMA®

CJ Miller, CFP®, RMA® is a financial planner with Sensible Money in Scottsdale, Arizona. Miller is also a member of the Financial Planning Association (FPA) of Greater Phoenix Board of Directors and involved in Active 20-30 Club.

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