How to Maximize Your Credit Card Rewards Without Getting into Trouble

Using Credit Cards Wisely

You may have noticed that the credit card companies are becoming much more aggressive with their rewards programs. That’s because the more big spenders they attract, the more revenue they can generate from merchant fees. That’s good news for those of us looking to maximize points and cash back rewards. Done right with a disciplined strategy, there is nothing but upside. However, if you’re not careful, it could wind up costing you more than you could ever get out of it. It’s easy to get caught up in chasing rewards, which leads many people to spend money they didn’t budget for. That often leads to carrying a balance on their credit card, which can negate the value of the rewards. It can also lead to a debt problem if you’re not prepared to handle it. Here’s a strategy that will keep you out of trouble while maximizing your rewards.

Match the Rewards Program with Your Spending Habits

The key to rewards optimization is to be able to receive maximum rewards based on your everyday spending habits. For big families, choosing a card with big grocery rewards makes sense. If you drive a lot, choose the card with big gas rewards. Analyze your spending habits to see which type of rewards you can build quickly. Cards with rotating categories offer the biggest cash back rewards, but you will need to track them on your calendar.

Treat You Rewards Cards Like Cash

The simple truth is that people get into trouble when they use their credit cards to buy things they can’t afford. If you can’t pay for something with your cash on hand, it means it’s not in your budget. The first principle of credit card management is to restrict their use to paying for budgeted expenses – food, gas, utilities, etc.) and then pay the balance in full each month. Never pay for anything with your credit card that you can’t cover with cash when the bill is due.

Track Your Spending

Using a credit card makes it easier to track your spending. Use your credit card’s online account to manage your spending plan. You should have a maximum spending limit for your card based on your monthly budget. Checking your account weekly will make it easier to make any necessary adjustments in your budget to keep your card balance within the limit.

Don’t Chase Rewards

To maximize your rewards versus money spent, the first rule to follow is to avoid spending money just to earn rewards. If you spend beyond your budget on things you don’t really need, you can easily come up a loser. The important reason you don’t want to spend beyond your budget is you risk carrying a balance, which, after paying interest charges, can negate the benefits of your rewards.

Always Pay Your Card Balance in Full

Once you start carrying a balance on your rewards card it becomes a losing proposition. If you slip and find yourself with a balance at the end of the month, you need to adjust your spending plan to pay it off a quickly as you can; otherwise, you might as well get out of the rewards game.


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The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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