If you have a good credit score, it’s smart to think about how to get more value from your credit cards. Credit card rewards are a popular option, as they’re one of the most valuable features card issuers offer. In this guide, you’ll learn everything you need to know to maximize your credit card rewards.
How do I make the most of my rewards credit card?
Maximizing your credit card rewards is achieved through using your rewards card on all your spending and paying the bill in full every month
Here are a few guidelines to make the most of your rewards credit card:
- Use your rewards card for every purchase: You’ll earn rewards whenever you make a purchase with your card. As such, you should use it for all your spending. If you pay with cash or a debit card, you’re leaving potential rewards on the table.
- Don’t overspend to earn more rewards: Some consumers use rewards as a justification to spend more. This isn’t a good idea. Imagine you spend an extra $100 at restaurants this month because your credit card offers 5% back on dining. After that $5 back, you’re still down $95. It’s better to follow your budget and not adjust your spending habits to gain credit card rewards.
- Pay your credit card bill in full: Interest charges can reduce or wipe out the value you get from credit card rewards. Rewards cards also tend to have higher interest rates than other types of credit cards, making this even more of a problem. If you pay your card off every month, you won’t be charged credit card interest.
- Redeem your credit card rewards regularly: Rewards won’t usually increase in value, but they can get less valuable over time. For that reason, it makes sense to use credit card rewards promptly.
- Watch for new credit card options: The best rewards credit cards change often as credit card companies add benefits and launch new cards. Check out the rewards cards that are available every six months to a year. You may find there’s a card available that will work better for you.
To qualify for the rewards cards with the most benefits, you’ll generally need good or excellent credit. If you need help raising your credit score, you can learn how in our credit score guide.
What issuer has the best credit card rewards program?
Chase has the best credit card rewards program because it has several quality travel partners and it offers the best rates when you use points for cash travel bookings.
Chase rewards program
Here’s how you can use Chase Ultimate Rewards points to save big on travel:
- Transfer points to travel partners: Chase has a great roster of airline and hotel partners, including United Airlines, Hyatt Hotels, and Southwest Airlines. You can transfer Chase points to partners to book award airfare or an award hotel stay. Let’s say you want to book a ticket with United for 30,000 miles. You could transfer 30,000 Chase points to United. Those points would become United miles you could use to book the ticket.
- Redeem points with the Ultimate Rewards travel portal: Chase also lets you use points to make cash travel bookings through the Ultimate Rewards portal. Your points are worth $0.0125 each if you have the Chase Sapphire Preferred® Card. They’re worth $0.015 each if you have the Chase Sapphire Reserve®. For example, if you have 10,000 Chase points, you could use that to buy either $125 or $150 in travel, depending on which Chase rewards credit cards you have.
The Chase Ultimate Rewards program ranks at the top, but there are a couple of other great rewards programs you may want to check out.
American Express Membership Rewards
American Express also offers quite a few travel partners in its popular rewards program. You can transfer American Express Membership Rewards points to over 20 different partners. That includes domestic airlines, international airlines, and hotels. The Membership Rewards program provides so many options that American Express rewards credit cards work well if you like to shop around for the best travel rewards deals.
Citi ThankYou Rewards
Citi is another card issuer to consider as you shop for rewards credit cards. It has over a dozen travel partners where you can send your Citi ThankYou points. Most of these travel partners are international airlines. If there are any international frequent flyer programs you like, Citi rewards credit cards could be just what you need.
Bank of America Preferred Rewards
Bank of America rewards credit cards are ideal if you already use its banking or investment services. Through the Bank of America Preferred Rewards program, you can get bonuses of 25% to 75% on all your credit card rewards. To qualify, you need to meet minimum balance requirements that start at $20,000.
Unlike the card issuers above, Bank of America doesn’t offer transfers to travel partners. Instead, it offers cash back rewards and fixed-rate travel redemptions depending on which of its cards you have.
Which is a better option: Cash back or credit card rewards programs?
Credit card rewards programs are generally the better option if you travel multiple times per year. The top rewards programs give you ways to redeem points for a high value when you use them to book travel. Transferring points to travel partners, in particular, is one of the smartest ways to maximize credit card rewards.
Cash back is the better choice if you aren’t a frequent traveler. It’s also the way to go if you want the simpler credit card rewards option. There can be a learning curve to credit card rewards programs as you figure out how to best use your points. With cash back, you don’t need to deal with that. Cash back credit cards are easy to use and can work for anyone.