Key Takeaway: Maximizing your credit card rewards requires choosing credit cards that suit your spending habits, combining cards with benefits that complement each other, and redeeming for the best possible value. Earning your sign-up bonus can also ensure that you get the best value for your spending.
Maximizing credit card rewards comes down to knowing where you spend the most money and getting cards that fit those habits. If you’re intentional about the cards you pair and the types of rewards you want to earn, then you’ll put yourself in a great position to get the most value possible from those rewards.
- Decide what kind of credit card rewards you want
- Pick cards that align with your spending
- Earn all your available sign-up bonuses
- Combine your credit cards with purpose
- Use credit card combos in the same rewards program
- Redeem your rewards for the best value
- What’s next? Finding the right credit cards
- FAQs about maximizing credit card rewards
Decide what kind of credit card rewards you want
You can’t maximize your rewards if you’re not earning the kind that suits your lifestyle and habits. For straightforward rewards, you may want to earn cash back. But for more flexibility and higher redemption rates, you may be better off with points or miles that can be redeemed towards travel.
Points and miles typically function similarly — as a currency for a specific rewards program. And just like real currency, the value of your points and miles can fluctuate.
Here’s a breakdown of the types of rewards you can earn from credit cards:
Cash back
Cash back is often the most accessible type of credit card reward, and the easiest to understand. With cash back cards, all you have to do is spend money in the qualifying cash back categories. You’ll then get a percentage of your purchase back, typically to redeem toward your credit card statement. You can sometimes also apply your cash back rewards to other redemptions like gift cards, travel bookings or select entertainment purchases.
Travel rewards points and miles
Travel rewards points and miles can be more than other types of rewards, but they hold the most potential of any rewards.
Many travel credit cards allow you to redeem points or miles for travel, entertainment, cash back and more. Some popular examples of these kinds of rewards include American Express Membership Rewards® and Chase Ultimate Rewards®.
These programs may also allow you to transfer your points to partner travel loyalty programs, and that flexibility is where the rewards really shine. For example, you might be able to transfer your points to a partner airline or hotel program at a 1:1 ratio.
Meanwhile, co-branded travel credit cards usually offer rewards with the associated airline or hotel brand. Those rewards usually can’t be transferred to other brands, but they make more sense if you stick with one airline or hotel when you travel.
Rewards points
Rewards points are similar to travel rewards points and may even be redeemable through a card issuer’s travel portal. In practice, though, these points can be used for a variety of redemptions — cash back, travel, gift cards, merchandise, etc. — at a steady rate. These rewards are best for people who might redeem in a variety of ways, but the overall value is similar to what you’ll see from cash back.
Pick cards that align with your spending
You won’t be able to maximize your credit card rewards if your card’s bonus categories don’t match your spending habits. Look at your monthly expenses and identify the categories where you spend the most money, as well as categories where you spend the most consistently. That might include travel, restaurants (including delivery), gas and EV charging, or groceries.
Let’s say you spend a lot of money on travel bookings, but only make travel purchases a few times per year. At the same time, you spend a steady amount at gas stations each month. In that case, you might want to look for a card with a high rewards rate on gas station purchases along with a high rewards rate on your most common travel categories, like airfare or hotel stays. That way you’ll earn steady rewards from your gas purchases while also getting a meaningful boost when it’s time to spend on travel.
Earn all your available sign-up bonuses
One of the best ways to maximize your credit card rewards is to earn your card’s sign-up bonus, which will likely offer rewards much greater than what you’d earn from everyday rewards rates.
A sign-up bonus, also called a welcome bonus, usually requires you to spend a set amount of money in a certain timeframe after your card account opens. For example, a card may offer 60,000 bonus points if you spend $4,000 within the first three months after account opening.
If you think you might have a hard time hitting a spending threshold just through everyday spending, try to time your card application so any large upcoming purchases fit into the sign-up bonus window. That way, you’ll be able to earn the bonus without breaking your budget.
Combine your credit cards to cover multiple bonus categories
No credit card comes with the highest rewards rates in every available spending category. If you want to maximize rewards, you’ll need to combine cards thoughtfully to earn on all your spending, not just a few categories.
For example, let’s say you spend a lot at gas stations every month and already have a card with a great rewards rate on those purchases. But you’re also spending more on restaurants and delivery, and you don’t have a card that earns bonus rewards on that spending. To maximize rewards, you’ll want to get a card with bonus rewards for restaurant purchases, and ideally also with a higher base rate greater than 1% (or 1 point per $1) on all other purchases.
Use credit card combos in the same rewards program
Maximizing your rewards can happen faster and more easily if you earn them within the same program. While splitting your cards between rewards programs might not mean much if you’re only earning cash back, you should be able to earn more rewards overall if you’re earning travel rewards.
For instance, let’s say you have a powerful travel card in a program like Chase Ultimate Rewards®, but it only earns bonus reward multipliers on travel and restaurant purchases. If you combine it with other cards in the same program that earn bonus rewards on categories such as drug stores, gas and groceries, you’ll expand your earning potential. But if the program also allows you to combine rewards earned from multiple cards, you’ll be able to use the travel card to maximize both your value and redemption possibilities.
Redeem your rewards for the best value
Your rewards are only as valuable as the value you get when you redeem them. While the cash back you earn is usually straightforward — 1% of $1 is always one cent, for example — the value of your points and miles can fluctuate.
If you keep your points and miles within your card’s rewards program, the value will depend on the specific redemption you choose. If you redeem for a flight or hotel stay, try to assess the value of that redemption relative to the price you’d pay in cash. If your rewards program allows you to transfer points to an airline or hotel partner program, only do so if you know you’ll get a value greater than what you’d earn through the issuer program.
Assessing these point values can be time-consuming and tricky, but the potential reward is great. A resource like Credit Karma’s estimated point values can help ensure you’re getting the most value for your points.
How often should you redeem your credit card rewards?
You should redeem your rewards as often as needed for you to feel like you’re getting the best value from them. For some people, that may mean waiting until a planned trip, and for others, that may mean redeeming their rewards monthly as they earn them. Just don’t wait forever to make a redemption. Remember, your credit card rewards are only hold hypothetical value until you use them.
If you let your cash back sit in your account for too long, for example, you might find that you’re actually losing out on purchasing power due to inflation and other factors. Similarly, letting your points or miles accumulate without using them can make your rewards vulnerable to devaluation by the issuer.
What’s next? Optimizing your credit card use
With the right strategy, the right credit cards and an understanding of your spending habits, you can maximize your rewards in a way that works for you.
To help you get started, consider using Credit Karma’s Card Optimizer. Once you match and link your cards, this tool can track your spending and show you any opportunities you might’ve missed to earn additional rewards with another card. It can also let you know when certain card benefits are about to expire so you don’t miss out on any perks.
FAQs about maximizing credit card rewards
Cash back credit cards allow you to earn a percentage of your purchase back as a reward. Travel rewards cards typically provide points or miles that can be redeemed when you book travel, among other redemptions. Cash back is often a simpler rewards system but not very flexible, while points and miles generally allow you to get additional value out of your rewards, depending on your redemption method.
There’s no magic number of cards you should have to maximize credit card rewards. The right number for you is dependent on how much effort you’re willing to put into your strategy and what you’re comfortable paying off each month. That said, many popular credit card combinations include at least two to three cards.
Rewards cards likely won’t make sense for someone who often carries a balance on their credit cards. Any rewards you earn will be outweighed by the interest you pay on your balance. If you regularly carry debt, consider a balance transfer card to help you pay down your balance before you look into getting a rewards credit card.
The value of credit card points and miles varies based on which rewards programs and redemption methods you’re using. Many programs offer a baseline redemption rate of 1 cent per point, but that rate can be higher or lower depending on whether you transfer your points to partner loyalty programs or keep them within the original program.
Credit card rewards may or may not expire depending on the rules of your rewards program. Points or miles from major credit card rewards programs, like Chase Ultimate Rewards, generally do not expire unless you close your account or otherwise violate the issuer’s rules. Read your rewards program’s terms and conditions to find out whether your points can expire and how.
A credit card with an annual fee is worth it if the rewards, credits and perks you’ll actually use outweigh what you pay. Cards with annual fees, most ranging from $95 to $550 a year, may offset the cost through travel credits, elevated cash back rates, or lounge access — but only if the card is right for your habits and spending patterns.