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While many reward enthusiasts focus on signing up for new credit cards in order to receive sign up bonuses, not everyone has the time or desire to play the sign up game. After all, it’s difficult to keep track of multiple cards, annual fees, and reward programs, and some people don’t want to spend their time or mental energy that way.
If you’re someone who falls into this category, it might be better to maximize a card or two than chasing rewards. Fortunately, there are many rewards that can be earned over time if you understand your card’s perks and bonus categories.
The key to getting the most out of your reward cards is understanding how they work and looking for ways to earn more points for your daily expenses. Here are some tips that can help.
Brainstorm every bill you could pay with a credit card
Since reward cards offer points based on every dollar spent, maximizing the amount you can spend on credit is the best way to grow your rewards. The smartest strategy to use here is to find out how many of your monthly bills you can pay with a credit card.
While you may not be notified or aware of it, it is possible that bills that you have been paying with a check or debit card for years can be paid with a credit card with no fees. While your bills can vary, some expenses you should try paying with a credit card include the following:
- rental fee
- Electricity bills such as electricity or gas
- Health insurance
- Cable television and internet
- day care center
- Car and home insurance
- Subscription services
- Tuition fees or student loans
- Medical bills
- Lawn care
Remember, these are just a few of the bills you could pay with credit. Depending on your situation, there may be additional, unusual costs that can easily be paid for with credit.
Also, remember that these extra bills should be paid with credit on top of your daily expenses such as groceries, restaurants, gasoline or bus tickets, and other expenses. Every time you buy something in person or online, make an effort to pay with your rewards card when you can.
Use your reward card bonus categories
It is also important to take advantage of your favorite card bonus categories, regardless of what they are. This is especially important if you have a few cards with different bonus categories as you want to make sure you are using the correct card for bills that can be used to earn bonus points.
Let’s say you have a travel credit card that earns you 3x points for dining and travel and another card that earns you 6x points at the grocery store. In that case, it would be wise to use the travel card for restaurants and travel purchases and your other card when you stock up on groceries. While the number of rewards you earn from individual purchases seems nominal, using the right card to make the right purchase can help you earn much more rewards over time.
Set up automatically paid invoices to be paid with credit
Most of us have set up bills that are paid automatically, whether it’s Netflix and Hulu subscriptions, gym membership, or utility bills. Make sure that any invoice you’ve set up for auto payment is set up to be paid with your rewards card rather than a debit card. This way you can collect reward points for these expenses every month.
Use shopping portals and restaurants
Many flexible rewards programs, frequent flyer programs, and hotel loyalty programs have shopping portals that you can access to earn additional points. Big airlines like American, Delta and United also have shopping portals that work similarly. (See Also: How To Maximize The Rewards From Credit Card Shopping Portals)
Some programs like Southwest and Delta also offer restaurants. These programs allow you to earn extra points or miles just for dining at participating restaurants in your area. It’s easy and free to sign up. So you can earn extra miles for your expenses if you go out to eat anyway. (See Also: Everything You Need To Know About Airline Dining Rewards Programs)
How much the average family can earn
If you’re skeptical that the average family can collect significant rewards without signing up for new cards over and over again, check out how this could work in real life. For example, imagine a family of four with two adults being rewarded with rewards. About the two they have:
- A cashback card that gets 2% back
- A travel credit card that earns you 3% on food and travel
- A rewards card that gives you 6% cashback at the grocery store for up to $ 6,000 per year of spending
To figure out how much this family could make, we used the Bureau of Labor Statistics average spending in 2017. Here is an overview of this data for the year, as well as a family’s earnings over a 12-month period, based on average expenses:
- Eating at Home ($ 4,363): $ 261.78 rewards at 6%
- Eat away from home ($ 3,365): $ 100.95 at 3%
- Utilities, Fuels, and Public Services ($ 3,836): $ 76.72 @ 2%
- Household Operations ($ 1,412): $ 28.24 @ 2%
- Housewares ($ 755): $ 45.30 @ 6%
- Home furnishings and equipment ($ 1,987): $ 39.74 @ 2%
- Apparel & Services ($ 1,833): $ 36.66 @ 2%
- Gasoline & Motor Oil ($ 1,968): $ 39.36 @ 2%
- Other Vehicle Cost ($ 2,842): $ 56.84 @ 2%
- Healthcare ($ 4,928): $ 98.56 @ 2%
- Entertainment ($ 3,203): $ 64.06 @ 2%
- Personal Care Products ($ 762): $ 45.72 @ 6%
- Education ($ 1,491): $ 29.82 @ 2%
Total Reward: $ 923.75
While over $ 900 is a lot to make in a year, you have the potential to make a lot more. After all, these are just some of the issues the average family faces, and not all. If you could pay some extra large bills each month with credits like daycare or your rent, you could grow your bottom line significantly.
What to look out for
While maximizing reward cards is a smart idea if you are already using them, there are always pitfalls to be aware of when using a credit card. Here’s what to look for in your quest for more cashback and travel rewards.
Fees for using credits
While there are many bills that you can pay with credit at no charge, some vendors, merchants, and service providers charge a fee for using a credit card as a form of payment. Fees apply in particular to bills such as utilities, cable or internet, rent and insurance. Make sure you are not charged for using the credit before proceeding.
Don’t forget that some reward cards have annual fees. These fees can be worthwhile depending on your expenses and rewards, but you should always include them in the equation to ensure that each fee is worth paying. If you’re against paying annual fees, look for no-fee award cards.
Using a credit card for all of your expenses can make your financial life easier, but it can also throw your budget out of whack. Make sure you only spend on purchases that you plan on anyway, and that you keep track of your expenses and pay off your credit cards regularly.
Never use credit cards to make purchases that you cannot afford to pay back in pursuit of rewards. The interest you pay is always much higher than the rewards you deserve. If you are concerned about using credit, you will run into debt that you cannot afford to pay back. Instead, stick to cash or direct debits.
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