How to Maximize Your Credit Card Rewards and Cash Back

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One of my favorite ways to get free money fast is to maximize cash back and credit card rewards. If used correctly, credit cards can actually be a great tool for improving your financial situation.

The credit card industry is extremely competitive, and that’s good news for you and me. Thanks to the banks that fight for your business, you’re able to get some great rewards for purchases that you make with your credit card.

But getting the most out of your credit cards involves more than simply having a standard card that gives you 1% cash back. If you have the right cards and use them the right way, you can easily make a few hundred dollars per year (or much more) just from the things that you already purchase. And in this article, I’ll show you how.

Let’s look at the approach that you can use to maximize your cash back.

1. Use a Credit Card with at Least 1.5% Cash Back for Everyday Purchases

The industry standard for cash back is 1%, but there are some cards out there that offer better rewards. My go-to card earns 2% cash back on every purchase (1% at the time of purchase and 1% when I make the payment), and it has no annual fee. That’s double the cash back of the typical 1% card! That adds up fast!

The Chase Freedom Unlimited offers 1.5% cash back on every purchase, and there is no annual fee.

→ See a breakdown of the best cash back credit cards here.

2. Use the Chase Freedom Card to Get 5% Cash Back

The Chase Freedom card is a must-have if you want to maximize your cash back. The difference is how you earn cash back. With the Chase Freedom card you’ll get 1% cash back on all purchases, but each quarter there is a special category that will earn 5% cash back. The categories vary each quarter, but when the right offer is there you can rack up the rewards very quickly. Right now (at the time of writing this article) the current offer is 5% cash back on groceries. Last quarter it was 5% on gas. Other times it may be at retailers like Walmart or Amazon.

I’ve had the Chase Freedom for years, and I love it. I use it only for purchases in the 5% category. I don’t use it for other purchases because I can do better than the 1% cash back that this card offers. The key is simply to pay attention to the quarterly offers (Chase sends an email to let you know what purchases will earn 5%) and then simply remember to use the card when it’s appropriate.

3. Consider Specialty Cards

Ok, now that you have the Chase Freedom card for purchases that will earn 5% cash back, and you have an “everyday” card to get the best cash back on other purchases, it’s time to look at specialty cards. There are several options here, and what’s right for you will depend on your spending habits. The key is to find cards that offer higher than 1.5% cash back on things that you purchase frequently.

Some cards offer things like 3% or 4% cash back on gas, restaurants, or some other type of purchase. See a breakdown of the best rewards cards here.

You may also want to consider credit cards from stores that you shop at regularly. For example, Target and Lowes both offer 5% cash back on purchases if you use their card. If you’re an Amazon Prime subscriber, you can also get 5% back on Amazon purchases with the Amazon Prime credit card (I have this one too, and I use it for all of my Amazon purchases).

4. Take Advantage of Signup Bonuses

Sign up bonuses are a great way to quickly make some easy money. Bonuses typically require you to make a certain dollar amount of purchases on the card in the first 90 days to earn the cash back, so be sure you check those details.

For example, a card may offer a $150 sign up bonuses if you make at least $500 in purchases in the first 90 days. If you’re putting most of your purchases on credit card, those dollar amounts are very reasonable and you should easily qualify for the bonus.

I’ve signed up for several credit cards over the past few years in order to get the signup bonus. You should always read the terms of the offer to make sure you know what you’re signing up for.

5. Pay for Everything with Your Credit Cards

Now that you have some great cash back credit cards in your wallet, the key is to use them for every purchase. You don’t want to make any purchases simply to earn cash back, but when you’re making a purchase anyway, use the best card. If the purchase falls in the 5% category with Chase Freedom, use that card. If you have another card that earns high cash back on that purchase (like gas), use that card. Otherwise, use your everyday card so you earn at least 1.5% or 2%.

Many of your monthly recurring bills can be paid by credit card. This includes things like your cell phone, internet access, cable TV, utilities, insurance premiums, and maybe even things like your car payment. If you can get all, or at least most, of your recurring monthly bills on a good cash back credit card you’ll see the rewards adding up quickly.

→ Related reading: 12 Simple Ways to Get Free Walmart Gift Cards

6. Use Your Cards for Big Purchases

It’s not just everyday purchase that you can use credit cards for. Big purchases are where you’ll earn a lot of cash back in no time. For example, when my wife and I purchased a car we were able to put up to $5,000 of it on a credit card. With a 2% cashback card, that’s $100 in cashback just from that one purchase. You may also be able to pay tuition and other big bills by credit card.

7. Stack Your Rewards with Rakuten

If you like cash back, you will love Rakuten. With a free Rakuten account, you can earn cash back purchases from thousands of websites and retail stores, including Amazon, Walmart and many other big ones (and small ones too).

The amount of cash back varies by website/store, and sometimes it even varies by product category. With so many websites and stores participating with Rakuten it’s really easy to save some money this way.

There are basically 3 steps to earning cash back with Rakuten:

  1. Sign up for a free Rakuten account.
  2. Install the browser add on (optional) that will automatically notify you of cash back offers when you are browsing the internet.
  3. Click on the notification before making a purchase to activate your cash back. (If you’re not using the browser add on you can login to Rakuten and click through to a website before making a purchase.)

→ Right now Rakuten is offering a $10 bonus if you sign up through this link.

And to make it even better, if you use Rakuten and make a purchase with your cash back card, you can double dip on the rewards.

Rakuten is the leader of its industry, but you can also earn cash back with TopCashbackSwagbucks, and MyPoints.

For a detailed explanation (with examples) of how to do this, please see my article How to Stack Rewards and Cash Back, and see my list of the top 15 cash back websites.