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I’ve never considered myself a credit card rewards master. I don’t do any of the “hacks” that can help you earn more rewards. I don’t apply for a bunch of new credit cards every year to game the sign-up bonus system. And I don’t strategize and analyze every purchase to make sure I’m getting the most cash back possible.
But this year, I made close to $500 in pure profit from my rewards credit cards ($497.70, to be exact.) Here’s how I did it.
1. I Kept It Simple
I have three credit cards that I like to use. I don’t travel that often, so travel rewards credit cards, while understandably attractive for some and quite useful for many, aren’t ideal for me. They often have an annual fee that is often recouped if you use just one of their many perks (like checking your bags for free), but I don’t travel often enough to make them pay off.
In fact, all of my credit cards have no annual fee, so when I say I made $497.70 off my credit card rewards this year, I mean it. I’ve had my eye on a new credit card that has an annual fee, but I’m crunching the numbers on my spending to see if its rewards would outweigh the ones I’m earning already.
The other way I kept it simple was the way in which I redeemed my rewards. I like getting cash back, directly deposited into my bank account. It may not earn me the most rewards — sometimes you can get a little more value for your points by redeeming for gift cards, for example — but it gives me the freedom and flexibility I enjoy from having cash directly in my (digital) pocket.
2. I Paid Off My Balances in Full (Always!)
I have never carried a balance on my credit card. I got married this year (you can check out how I planned my debt-free wedding here) and used my credit cards to make a lot of payments that were immediately paid off in full. This helped me earn a lot more in rewards. For example, I paid for my all-inclusive honeymoon hotel using my credit cards. That’s an expensive purchase that would have been even more expensive if I had carried the balance over multiple months. Instead, my husband and I saved enough money to pay off the charge as soon as it hit my credit card, earning us the rewards without having to pay interest charges.
3. I Charged Nearly Everything
A $5 Starbucks run, a doctor’s bill, a car rental, a wedding vendor … I charge nearly everything to my credit cards because I get 1% back on all purchases with all three of them and up to 5% cash back depending on which card I use and the item.
This is a tip I wouldn’t necessarily recommend for everyone. I never charged more than I could afford, but I’ll caution you that this may not be the easiest strategy for everyone since their credit limits are different. If you overspend on your credit cards, you could ding your credit score. I have a good credit score, which has allowed me to get limit increases on the credit cards I use the most. It also lets me spend more on those cards without reaching a credit utilization over 30%. Experts recommend keeping your credit utilization under 30%, and ideally under 10%, to get the best credit score.
4. I Kept an Eye on my Statements
I check my financial accounts every day, no exaggeration. I am monitoring every transaction made on all of my credit cards and making sure I track my spending, balances and due dates. Obsessive? Maybe, but I like being on top of my finances.
I’m able to spot fraud immediately, I can see if I was overcharged somewhere and contest the charge if need be, and I know if I need to cut back my spending this month or if I can afford a small splurge. The best part of checking my statements, however, is watching that cash-back amount grow. It’s fun, and when I look back at the year and realize I’ve made $500 off my usual spending, it makes me feel like a savvy cardholder.
My goal for 2016 is to continue to make the most of my credit cards — $600 cash back in 2016 would be nice, but staying debt-free and maintaining my good credit score is my primary goal.