Any handyman will tell you that the key to working efficiently is to always use the right tool for the job. Just as you can’t turn a screw with a hammer, or drive a nail in with a screwdriver, an expert credit card user needs to take the same approach to earning rewards. Each reward credit card is a unique offering that must be used wisely in order to earn the most rewards. So how do I do it?
Maximizing bonus categories of spending
Nearly every reward credit card will earn 1% cash back or the equivalent value in points or miles. The key to really maximizing rewards is to earn much more than that. Most, but not all credit cards will offer bonuses for spending in certain categories. For example, my Chase Sapphire Preferred card offers double points for restaurants and travel expenses, as well as triple points for travel booked through their Ultimate Rewards web site. That is why it is the only card I use for dining out and when paying for airfare.
Even better is their Ink Bold charge card for businesses. It offers 5x points for telecommunications purchases such as telephone, cable television, and Internet service. Therefore, it is the only card I use to pay those bills. In addition, I also use my Ink Bold at office supply stores. Although I do not purchase a lot of office supplies there, I find that I can purchase gift cards that allow me to earn the 5x bonus rewards when shopping at other merchants.
Earning the right kind of rewards
As good as it is to own a tool that does one thing great, it is even better to own a tool that has many fantastic uses. That is essentially what cardholders get when they earn points in a flexible rewards program. For example, my Chase Ultimate Rewards points can be redeemed for cash back, travel purchases, or transferred to points or miles. Their program includes United, Korean, British, and Southwest airlines. And since United, Korean, and British Airways are each part of one of the three major airline alliances, I know that I can use these points for award travel on nearly every airline in the world. Other similar programs with point transfer options include the Membership Rewards and Starwood Preferred guest programs.
By maximizing the bonus spending categories, and earning flexible rewards, I end up earning rewards for my credit card spending which have value far in excess of the standard 1%. The key is having the right tools and knowing when to use them.
Read Jason’s introductory post on earning rewards like a pro here.