Updated: June 27, 2024
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Maximizing cash back credit cards can transform your everyday purchases — whether groceries, gas or travel — into savings. The right cash back strategy will let you get the most out of your money by taking advantage of areas where you're already spending. Explore our guide to maximizing cash back rewards and growing your savings with every swipe.
Maximizing cash back on credit cards involves a few strategic moves that can significantly boost your rewards. By aligning your card choices with your spending patterns, you can turn everyday purchases into savings.
Find a card that suits your spending patterns
Select a card that mirrors your spending to effectively maximize your cash back. For families, a card offering higher cash back on groceries and gas can turn everyday expenses into savings. If your day involves commuting and lunch out, a card with elevated cash back on gas and dining can be beneficial. You can use MoneyGeek's cash back calculator to estimate the cash back you could earn for different cards.
Charge everything to your card (and always pay it off in full)
Use your cash back card on all eligible expenses. This strategy turns every purchase into an opportunity to earn rewards. If you have the Citi® Double Cash that offers 2% cash back on all purchases and you spend $1,000 per month, you'll earn $20 monthly, which turns into $240 at the end of the year.
However, the key to this approach is to pay off your balance in full each month. Otherwise, interest charges could quickly eat into your cash back earnings. If your card has an APR of 24%, you'll face a monthly interest charge of about 2%. If you're carrying a balance, this 2% monthly charge can easily eclipse the benefits of earning 1.5% cash back, negating any financial gains from your rewards.
If you’re willing to do some extra planning, you can potentially get even more cash back with your credit card. Follow these smart cash back strategies to earn bigger rewards from your purchases.
Amplify your cash back earnings by pairing a flat-rate cash back card with one that offers high rewards in specific categories.
For example, the Wells Fargo Active Cash® card provides unlimited 2% cash rewards on purchases, making it a solid base for all spending. Pair this with a card like the Chase Freedom Flex® card, which offers 5% cash back in categories like groceries and gas, and you've crafted a powerful rewards-earning duo.
Some cards feature rotating categories that can offer higher cash back on different areas of spending each quarter, reaching up to 6% (or higher). These often require you to opt in to actively receive the bonus rewards. Otherwise, you'll only gain the base cash back rate, which is typically 1% to 1.5%. Use your card issuer's app or set calendar reminders for rotating categories to ensure you're consistently earning the most cash back.
Credit card issuers' shopping portals can be a goldmine for earning extra cash back. By making purchases through these portals, you can often receive higher cash back than you would by going directly to the retailer.
The Capital One SavorOne Cash Rewards card lets you earn 5% cash back if you’ve booked a hotel room or rental cars through Capital One Travel and 8% cash back on your Capital One Entertainment purchases.
The best cash back credit cards feature high cash back rates, generous welcome offers and no annual fees. We’ve listed the top cash back cards to help you find the best card for your needs and lifestyle.
Maximizing your cash back rewards is just the beginning — using them wisely can have a lasting impact on your financial health. Consider this advice on what to do with the cash back you’ve earned.
The smartest thing you can do with your cash back is to pay off your credit card debt. By applying cash back directly to your card balance, you're effectively lowering the principal and reducing the amount of interest that accrues.
If you're free from credit card debt, the cash back you've earned can be applied to your current month's bill. This move frees up funds you can redirect toward paying down your student debt, car loan or mortgage.
Using your cash back rewards to grow your safety fund is an effortless way to save. If your card offers 2% cash back on all purchases, spending $1,000 a month could net you $240 annually, which you can use to boost your emergency savings.
If your issuer allows it, consider automatically transferring your cash back directly into your bank account. It simplifies the process and ensures that the cash back you earn goes toward building your safety fund.
Earning cash back on your credit card feels great, but resist the urge to treat this as free money. Consider the cash back as a discount on your purchases, not an invitation to spend more. This mindset helps you stay financially disciplined and ensures that your cash back rewards contribute to your financial goals rather than becoming a gateway to unnecessary debt.
“You can use the cash back you earn to save for a special occasion. Growing up, my parents would only use cash back credit cards from January to November. Whatever we had in cash back rewards was money to be spent on Christmas. This strategy won’t likely obtain the highest “value,” but it worked well for my parents and their personal finances.” — Brett Holzhauer, contributing expert for MoneyGeek
We respond to some of your frequently asked questions about maximizing cash back rewards to help you get the most out of your cash back credit cards.
Select a card that aligns with your spending patterns to maximize cash back. For example, if you spend heavily on groceries and gas, look for a card that offers higher cash back percentages in those categories. Always be aware of any caps on rewards, and plan your spending to avoid hitting those limits.
Having multiple cash back cards can be beneficial if you use them strategically. For instance, you might use one card that offers high cash back on groceries for your supermarket trips and another that rewards dining and travel when you eat out or go on trips. You can use different bonus categories to earn more cash back overall.
Expiration policies vary by the card issuer. Some cash back rewards may expire unless redeemed within a certain period or if your account is inactive. Always check the terms of your credit card to understand the expiration policy and plan your redemptions accordingly.
Although most cash-back cards don’t charge annual fees, cards with higher rewards rates typically do. To determine if a card with an annual fee is worthwhile, calculate whether the cash back you can potentially earn will exceed the fee.
For example, the Blue Cash Preferred® Card from American Express has a $95 annual fee, but it lets you earn 6% cash back on U.S. supermarkets. Spending at least $133 per month on that category alone can compensate for the annual fee.
Yes, many issuers allow you to apply your cash back as a statement credit to your account, reducing your credit card bill. It is a straightforward way to use your rewards and can help you pay your balance faster.
About Doug Milnes, CFA
Doug Milnes is a CFA charter holder with over 10 years of experience in corporate finance and the Head of Credit Cards at MoneyGeek. Formerly, he performed valuations for Duff and Phelps and financial planning and analysis for various companies. His analysis has been cited by U.S. News and World Report, The Hill, the Los Angeles Times, The New York Times and many other outlets.
Milnes holds a master’s degree in data science from Northwestern University. He geeks out on helping people feel on top of their credit card use, from managing debt to optimizing rewards.
