Life hasn’t been the same since receiving the first rewards credit card. Now, every purchase must yield cash back or points, with a minimum of 2 percent back being the standard. Booking travel without using points is unappealing. If money is being spent, it’s essential to know how much can be earned back.
What began with a single rewards credit card in 2020 has evolved into the current strategy. This approach is expected to continue growing and changing, just like life and the spending that accompanies it. For now, here’s the strategy used to maximize credit card rewards.
Tailor the cards appropriate for spending
Here’s an important first point: maximizing credit card rewards is difficult if your cards don’t align with your spending habits. If you have a store card for a place you rarely shop or a cash back card with grocery bonuses when you mostly dine out, earning rewards will be challenging. It’s also crucial not to overspend just to earn rewards, as no points or rewards can outweigh the burden of high-interest credit card debt that can’t be paid off each month.
Therefore, before applying for a credit card, understand its role in your strategy and how it fits within your current and expected spending patterns.
For example, card rewards generally fall into two categories: travel or savings. Vacations are paid for with points and miles as much as possible, while cash back helps save on large purchases. Here’s a quick glance at how cards fit into spending:
- Capital One Venture X Rewards Credit Card: This travel card earns 2X miles on purchases outside its bonus categories (10X miles on hotels and rental cars booked through Capital One Travel, and 5X miles on flights through Capital One Travel). It’s used for all spending that other cards’ bonus categories don’t cover and for booking airfare with rewards.
- Capital One SavorOne Cash Rewards Credit Card: This card is used for food spending, earning 3 percent cash back on dining and groceries with no annual fee. Rewards are pooled with the Venture X, as cash back can be transferred to a miles-earning card with Capital One, but not vice versa.
- Chase Sapphire Preferred® Card: This card is for travel spending outside of airfare, earning 2X points on travel purchases. It covers expenses like parking, Uber, tolls, and public transit passes, and offers 5X points on Lyft rides through March 31, 2025. Most streaming subscriptions and some food purchases (earning 3X points on dining, select streaming services, and online grocery purchases excluding Walmart, Target, and wholesale clubs) are charged to this card.
- Discover it® Cash Back: This card offers 5 percent back in rotating categories (with activation required), up to $1,500 in purchases per quarter, then 1 percent back. Cash back earned is moved to the savings account where the emergency fund is kept.
- Affinity Cash Rewards Visa® Signature: This card earns 5 percent back at Amazon and bookstores, with rewards transferred to an Affinity savings account for large purchases and major goals like home renovation and mortgage refinancing.
- Capital One Quicksilver Cash Rewards Credit Card: As the oldest credit card, it earns 1.5 percent back on all purchases, less than the Venture X. A single recurring monthly charge is kept on this account to maintain activity, as closing it would negatively affect credit history and utilization ratio, both important credit score factors.
Pay the credit cars bills in full
Here’s a somewhat mundane yet crucial tip: avoiding credit card debt is paramount for maximizing rewards. It’s improbable to consistently earn more than 5 percent back or 5X points on any rewards credit card, while typical credit card interest rates hover around 20 percent. Carrying a balance can easily negate any reward earnings.
Credit card debt poses a significant obstacle to optimizing rewards, except in the case of 0 percent APR credit cards. For instance, I maintained a balance on my Discover it Cash Back for a few months after using it to furnish my apartment. With a reasonable introductory APR period, I incurred no interest during that time and didn’t sacrifice any cash back (the ongoing APR ranges from 18.24 percent to 28.24 percent).
It’s crucial to remember that the introductory APR is only valid for the promotional period’s duration. Additionally, keep an eye on your credit utilization ratio, as using over 30 percent of your available credit can temporarily lower your credit scores until the balance is paid down.
If you find yourself carrying a balance, don’t be disheartened; it’s a common situation. Instead, focus on paying down balances on any credit cards with one. Consider exploring balance transfer cards, which offer no interest on transferred balances for a promotional period (often extending beyond 12 months). Remember, rewards can wait.
Earn sign-up bonuses — when it makes sense
Welcome offers present the best opportunity to accumulate a large number of points, and seizing such opportunities is always a priority.
Unfortunately, this chance didn’t come with the Quicksilver, as that card was an upgrade from the Capital One Platinum Secured Credit Card for me.
However, I ensured to obtain the Venture X intro offer, which, at the time, amounted to 100,000 miles (equivalent to $1,000 in travel). Presently, you can obtain 75,000 miles (or $750 when redeemed for travel) by spending $4,000 in the initial three months.
Additionally, the SavorOne bonus—a $200 cash bonus for spending $500 on purchases within the initial three months with the card—was recently earned. This reward has already been transferred to the Venture X, where it will await the next trip booking.
Book airfare with the Capital One Venture X
The Venture X serves as my preferred travel credit card due to its seamless earning and redemption of travel rewards.
With perks like a $300 annual credit for travel booked through Capital One and a 10,000-mile anniversary bonus (equivalent to $100 when redeemed for travel), I ensure to maximize these benefits annually, effectively offsetting the card’s $395 annual fee. Additionally, the Venture X earns 5X miles on flights booked through Capital One Travel, making it a go-to for purchasing plane tickets.
To date, I’ve utilized the card for six trips, redeeming points at a value of 1 cent per point. Some of these trips involved a combination of miles and cash. I avoid stockpiling rewards to mitigate against inflation.
In instances where I’ve already exhausted the $300 annual credit, I don’t hesitate to book travel outside of the Capital One travel portal if I find better deals elsewhere. The card allows for the use of miles on recent travel purchases, enabling flexibility in maximizing rewards.
Book hotels with the Chase Sapphire Preferred
The Chase Sapphire Preferred serves as my preferred hotel card, offering the convenience of booking hotel stays at a value of 1.25 cents per point through the issuer’s portal, eliminating the need for me to consider transfer partners unless I opt to do so.
In contrast, I previously held the American Express® Gold Card, where I experienced lower value when booking a hotel stay through the travel portal, averaging only 0.7 cents per point. None of the issuer’s three hotel partners suited my needs, leaving me with limited options. Given the spontaneous nature of the trip, I hadn’t allocated funds in advance.
With the Chase Sapphire Preferred, such dilemmas are avoided. I appreciate the consistent value across all portal bookings and the added perk of up to $50 in annual statement credits for hotel stays booked through the Chase Travel portal.
Use the card benefits
A credit card’s value extends beyond its rewards program. Take the Capital One Venture X, for instance, which I acquired for its travel benefits — benefits I fully utilize. Upon signing up, I promptly enrolled in Priority Pass, ensuring lounge access at airports whenever possible. I also secured Global Entry and TSA PreCheck, enhancing my travel experience. Additionally, I’ve enjoyed perks like a car rental upgrade thanks to my Hertz President’s Circle status, a benefit available to cardholders until Dec. 31, 2024.
While some benefits may not be as glamorous, they’re equally valuable. For example, the Chase Sapphire Preferred offers Instacart perks that I consistently make use of. Although my complimentary Instacart+ membership expired, I still receive up to $15 in statement credits for Instacart purchases each quarter. It’s a nod to human nature — sometimes, a bit of convenience is warranted. Moreover, with this perk set to expire on July 31, 2024, I see no harm in embracing a bit of laziness while it’s still justifiable within my budget.
In Conclusion
Crafting a thoughtful credit card strategy can yield significant rewards. It’s essential to determine the level of effort you’re willing to invest in maximizing card rewards. Remember these key principles: Align your cards with your spending habits and consistently pay your bills in full.
By tailoring your card selection to your spending patterns and maintaining diligent bill payments, you can optimize your credit card rewards while sidestepping the pitfalls of credit card debt.