How to Get the Most Out of Your Credit Card Rewards

Do one thing: If you’re not in the habit of paying off your credit cards in full and on time every single month, reward cards may not be for you. The amount you’ll pay in interest will likely outweigh anything you would gain in other benefits.

Don’t Leave Money on the Table

Sometimes, the lure of a shiny new rewards credit card and its potential perks can be hard to resist. After all, when used correctly, certain credit cards can offer valuable benefits, including cash back, airfare discounts, and complimentary hotel stays, among other perks. 

Will you use it?

The thing is, not everyone who uses a card that offers rewards takes advantage of those benefits. A December 2024 survey by cardrates.com found that while almost 85% of respondents select a new credit card based on the kinds of perks and benefits they offer, only two-thirds (73%) have used their cash back. Only one-third (33%) have taken advantage of hospitality-related perks in the last year.

Take card inventory

If this sounds familiar, it may be time to take stock of the card (or cards) in your wallet to make sure you aren’t leaving money or other bonuses on the table. In addition, there are some other factors to consider before pulling out that little piece of plastic to cover your next vacation. 

Do Your Research

When selecting a new reward card, find one that rewards you for spending on things that you are going to buy anyway. Many credit card issuers extend rewards based on categories of spending, so you may get more back when you shop at grocery stores, for instance, or when you fly a certain airline. That’s why it’s vital to do the following:

• Take a careful look at your monthly spending habits.
• See where you spend money every month.
• Then look for a card that will reward you based on those habits.

• Read the fine print. It’s also important to read the fine print – all of it – before deciding to apply for another credit card. Some bonuses that lure in new cardholders have expiration dates and spending rules that might not make the deal quite as good as it first seems.

Unbiased Card Comparison

When you are shopping around for a new reward credit card, it can be hard to find a place online to get a completely unbiased comparison. That’s because many sites include sponsored credit cards. Fortunately, the Consumer Financial Protection Bureau (CFPB) has created a tool to help people determine which card might best suit their needs. Just type in a few details (your state, a credit score range, and the type of card you are interested in) and the tool will present you with a list of potential card choices that you can further customize based on your preferences.

Carrying a Balance Can Cancel Out Rewards

As mentioned previously, carrying a balance on high-interest credit cards can negate any potential benefits. Certified financial planner Samantha Mockford, a wealth advisor with Citrine Capital in San Francisco, notes you should only spend money on credit cards that you already have.

 “Beware of making purchases you would not have if you did not have the card,” she says. “Too often, people interpret ‘cash back’ as ‘free money’ but fail to recognize that they are paying to hold the card, paying for purchases, and (if they’re not paying off their balances in full), also paying interest.”

The rewards you earn on a card should be considered an occasional treat, Mockford advises, not something you rely on for your normal cash flow. “Sometimes people spend money they would not normally spend because getting cash back silences the inner voice that reigns in their spending.” In other words, don’t eat out more than you normally would just because your credit card gives you cash back for spending in restaurants.

Label Your Credit Cards

Another tip: If you choose a card with customized cash-back categories, and you have more than one credit card in your wallet, Mockford says, consider labeling the cards with a small piece of masking tape to remind yourself to reach for this card when spending in your customized cash-back category. She has a card labeled restaurants and another labeled groceries to remind herself which card she should reach for to maximize benefits.

Carrying Credit Card Debt? Do This.

Mockford says, if you carry credit card debt from month to month:

• Pause the credit card spending.
• Aggressively work to pay off the balances.
• Create a spending plan that includes saving for future goals and meeting your immediate financial obligations, so that you stay out of debt.
• Remember that “cash back” cannot solve spending or debt problems. It can be viewed as an occasional treat, but you should be cash-flow-positive without factoring in rewards.  

With reporting by Casandra Andrews