Key takeaways
- It's important to choose a cash back credit card that aligns with your spending habits and offers the most rewards in your biggest spending categories.
- Flat-rate cash back cards, bonus category cash back cards, cash back apps, shopping portals and issuer-specific offers can all help you maximize the rewards you earn.
- Making smart choices with your cash back is crucial, be it covering your monthly bills or setting it aside for a major buy.
With expenses seemingly always on the rise, why not get a bit of cash back on your everyday purchases? Savvy cardholders should work to learn how to maximize cash back credit cards perks and rewards throughout the year. If you’re using a cash back credit card, it’s important to understand how to get the most out of your cash back rewards. Keep reading to learn how to earn more cash back and up your cash back rewards strategy.
1. Evaluate your spending habits and find a card that suits you
One of the best ways to maximize cash back from a credit card is to simply choose the right card. Before you switch up your credit card spending strategy or consider applying for a new credit card, analyze your cash flow. How much money are you spending per month? Per year? What categories do you spend the most in? What do you ultimately want or need from a rewards credit card?
Start by using a budgeting app or a pen and paper to determine how much you spend each month and on what. Whether you’re ordering food delivery every Friday night or racking up travel miles with your favorite airline, make sure you understand where your money is going so you can choose a card that rewards you for the spending you’re already doing.
Understanding how much you spend helps you estimate what your rewards yield will be each year — making it easier to determine if an annual fee is worth it. If you don’t spend enough on a credit card each year to offset the card’s annual fee, that card is probably not the best option for you – opt for a card without an annual fee that fits your needs instead. Keep in mind, if your cash back card has a bonus offer, your rewards yield will likely be higher the first year you have the card.
Once you’ve noted how you’re using your credit card, you can identify which type of credit card best suits your lifestyle and typical spending habits.
2. Compare sign-up offers and welcome bonuses
If you’re in the market for a new cash back card, do your homework before making a selection. The best cash back cards come with excellent welcome offers and easy to meet minimum spending requirements.
There are plenty of cash back cards with solid welcome bonuses, including:
- Chase Freedom Unlimited®— Extra 1.5 percent on all purchases up to $20,000 in the first year, which means you can get an additional $300 cash back if you max out spending.
- Capital One Quicksilver Cash Rewards Credit Card — $200 cash bonus after spending $500 on purchases in the first 3 months from account opening
- Bank of America® Customized Cash Rewards credit card — $200 online cash rewards bonus when you spend $1,000 on purchases in the first 90 days of account opening
- Ink Business Unlimited® Credit Card — $750 bonus cash back after spending $6,000 on purchases in the first 3 months from account opening
3. Choose a card that offers bonus cash back in your biggest spending categories
In addition to choosing a card with a strong welcome bonus, you’ll want to apply for the cash back card that pays the biggest dividends on your personal spending.
Let’s say, for example, that your biggest expenses each month were groceries to stock your fridge. To get the most out of a card, you’d want to choose one that gives solid cash back on grocery purchases. The no-annual-fee Blue Cash Everyday® Card from American Express is one of the best credit cards for groceries, offering cardholders 3 percent cash back at U.S. supermarkets (up to $6,000 per year, then 1 percent). It also offers 3 percent back at U.S. gas stations and on U.S. online retail purchases (with the same $6,000 limit on purchases per category, then 1 percent).
Or maybe you’re more likely to eat out at restaurants or order takeout – if that’s the case, a card that rewards dining out would make more sense. The Chase Freedom Flex℠* offers 3 percent cash back on dining (including restaurants, takeout and eligible delivery services), so it would be a great option for you. Chase Freedom Flex is a rotating bonus category card that earns 5 percent cash back on activated bonus category purchases each quarter (up to $1,500 in purchases, then 1 percent). Chase announces the bonus categories quarterly, so it can be tough to predict value or plan your expenses, but categories have historically included common everyday spending options like Amazon.com, grocery stores, gas stations or restaurants.
If your cash back card has rotating bonus categories, keep an eye on your issuer’s cash back calendar and activate the bonus categories each quarter. This way, you’re eligible for the bonus cash back rate. Otherwise, you’ll only earn the base rate, which is usually 1 percent on all your spending.
The Discover it® Cash Back, for example, earns 1 percent cash back on all non-category purchases, but also offers 5 percent cash back on up to $1,500 in activated rotating bonus category spending each quarter (then 1 percent). Make sure you’re enrolled in these offers and max them out whenever your spending allows.
4. Complement your bonus category cards with a flat-rate cash back card
The best flat-rate cash back credit cards pair nicely with cards offering cash back in select bonus categories, but they’re also great for people who have no desire to keep track of rotating categories or earning caps.
To ensure you’re earning the maximum cash back value from your flat-rate cards, look for bills you can pay with a credit card. In many cases, you can put your bills on a credit card without incurring a processing fee. Consider paying your insurance premiums, utility bills, mortgage payment, rent and subscriptions with your flat-rate card.
If you’re using multiple cards as part of your cash back strategy, it’s important to remember which cards are best used when. To stay organized, give each card a helpful nickname in your digital wallet or slip a hand-written legend into your wallet so you’re prepared to use the right card at the right moment.
5. Take advantage of issuers’ shopping portals and special offers
Before you shop, whether in-person or online, look for card-linked offers from your credit card issuer. For example, if you have the Chase Freedom Flex or Chase Freedom Unlimited, check the Shop through Chase portal to earn more cash back on all your purchases. Although the stores in the Chase shopping portal vary, they frequently include options like Walmart, Sephora, Best Buy and Macy’s. Other issues have their own portals – with Barclaycard you can shop on RewardsBoost, and with a Capital One card you get access to Capital One Shopping.
Some issuers offer additional cash back opportunities as well. American Express, Chase, and Capital One have programs — Amex Offers, Chase Offers and Capital One Offers, respectively — through which you can opt in to earn additional cash back from select retailers.
For example, with the Capital One QuicksilverOne Cash Rewards Credit Card, you can earn more cash back with particular retailers. To do so, log in to your Capital One account and navigate to the offers portal. In the portal, click “Get this deal” to be taken to a retailer’s site to shop and earn additional rewards at check out.
Generally speaking, these offers are found in your online account, have limited redemption windows and must be accepted individually. Cash back percentages vary from store to store, and there are usually limits that cap how much additional cash back you can earn.
6. Make the most of cash back apps
If you want to earn more cash back for online purchases, you often can increase your earnings through the use of cash back apps.
Cash back apps and sites like Dosh, Ibotta and Rakuten (formerly Ebates) give you a percentage of your spending back on qualifying purchases — on top of the cash back you’re earning on your credit card. For example, Rakuten lets you earn additional cash back when you click through the website before you shop with stores like Kohl’s, Macy’s, Nordstrom, Old Navy and Priceline.com.
7. Use your cash back wisely
Finally, using your cash back rewards wisely is just as important as maximizing your cash back earning opportunities. Many people choose to use their cash back rewards as statement credits to offset their monthly spending, but getting a rebate on money already spent isn’t the only option. Sometimes, the best way to use cash back rewards is to pay yourself forward with your cash rewards by saving up for a big purchase you might not otherwise buy. You can also invest your returns each month and let your cash back pay you longer-term dividends for the future.
The bottom line
If you take a little time to spend strategically, you’ll be raking in cash back rewards before you know it. You can maximize cash back from your credit card by using one of the best cash back credit cards on the market for as many of your everyday purchases as possible.
In the meantime, you’ll also want to avoid carrying a balance so you won’t have to pay interest on your purchases. With the average credit card APR currently over 20 percent, racking up rewards won’t make any sense if you also rack up long-term debt.
Issuer-required disclosure statement:
*Information about the Chase Freedom Flex℠ has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.
