Cash back reward cards are a simple and quick way to earn money on everyday purchases. The program concept is straightforward: shop at specific retailers and earn a percentage on these purchases. For example, the Bank of America Cash Rewards credit card pays 2% cash back on groceries, 3% cash back on gas and 1% cash back on all other purchases. Redeem your points and the bank will deposit your cash directly into a savings or checking account.
Here are four ways to get the most out of cash back reward cards.
1. Use Your Cash Back Credit Card to Pay Your Bills
The majority of cash back credit cards pay at least 1% on all purchases. Pull out your credit card to pay your monthly bills and quickly increase your cash back bonus. In hindsight, reward cards are an excellent way to earn cash and other gifts, but it takes awhile to accumulate enough points for a cash payout. Use your cash back credit card to pay your mortgage, utility bills, gas, groceries and other expenses throughout the month and you’ll earn cash on a monthly basis.
2. Pay Attention to Promotions and Specials
Your credit card company may run a promotion where they offer 5% cash back on gas, hotels, airfare and other purchases for a limited time. Periodically visit your card company’s website to check for promotions and then take advantage of these opportunities to increase your cash back bonus. For example, if your Discover credit card offers 5% cash back on gas during the month of June, use this card each time you visit the gas station. The more trips to the gas station, the more cash you can earn.
3. Stick With One Credit Card
There’s nothing wrong with having multiple reward cards. But to get the most out of your cash back rewards card, it’s best to stick with one credit card, as opposed to spreading your purchases across multiple credit cards. The majority of cash back reward cards let you redeem cash rewards once you’ve accumulated $20. Choose the card with the best cash back reward program and then use this card for all your purchases.
4. Keep the Account in Good Standing
Rules regarding cash back reward programs vary by credit card company. Know the rules of your particular company to avoid forfeiting your bonus. For example, some credit card companies penalize participants for inactivity. In other words, if you don’t use your credit card for a long period, you can lose your cash reward. The same rule applies if you default on your credit card bill. Because cash back and reward credit cards are reserved for responsible account holders, many banks and credit card companies have revoked or suspended reward programs for late payments. This results in participants losing any accumulated cash or points.
Always pay your credit card statement on time each month, and if possible, keep your account in excellent standing by paying your balance in full each month to maximize the value of your cash back reward cards and minimize any other costs of the account.