If You Use A Credit Card, Maximize Your Rewards!

My husband sometimes has to double check with me to make sure he’s using the right credit card before putting gas in the car, because we have specific cards that we use in different situations.  It might seem a little complicated at times, as there are four credit card bills to pay each month, plus a debit card that has to be used on a regular basis.  But it’s actually pretty easy to stay on top of, especially with online bill pay and statements.

Basically, we’re always making sure that we maximize our credit card rewards.  None of our cards have any annual fees, and we always pay our bills in full each month, so we never pay interest on any of the cards (If you aren’t in a position to be able to do that, credit cards in general are probably not a good idea – the rewards are only worthwhile if you’re not paying interest on the purchases you make).

But assuming that you pay off your credit card or cards each month, are you also making sure that you’re using a card that gives you good rewards?  Some people like cash or gift cards, some like do-dads, some like airline miles… there are tons of options out there, you just have to make sure that you’ve shopped around to find the ones that work for you.

For our family, our primary card is a Fidelity American Express.  We set up a Fidelity IRA a few years ago, and we get a reward that amounts to 2% of everything we spend on that card.  It’s automatically deposited into the IRA every time the bonus amount reaches $50.  It’s a pretty easy way to add to our retirement savings.

We have another AmEx from Costco (it doubles as our Costco membership card).  It pays us 3% cash back on gasoline and dining out, so that’s the card we use any time we fill up the car or eat out.  We eat out very rarely, but we do have to fill our gas tank every few weeks, and the extra cash back adds up.

In addition to the two AmEx cards, we have a Visa that we use as a backup card for places that don’t take AmEx.  We carry very little cash, so we like to make sure that we have a universally-accepted card on hand too.

We also have a debit card that’s linked to our credit union checking account.  The account pays 2% interest on our balance, as long as we make 10 debit card purchases each month.  In order to maximize the rewards on the other cards, we only use the debit card for small purchases – usually less than $5.  I check the account online throughout the month so that I can keep track of how many purchases we’ve made, and I’ve even been known to divide up a purchase into two separate transactions if we’re getting close to the end of the month and haven’t made ten debit card purchases yet.  At first, this seemed like a chore, but we’ve been doing it for four years now and we love the fact that our credit union pays interest on our checking account (our old bank did not).  So it’s worth it.

And last but not least, we also have a credit card for our business.  Most of the purchases on that card are automatic transactions that go through every month to keep our business up and running.  We almost never have to use that card in person, but it’s there if we need it.  And we get gift cards to Home Depot or Lowes every time we accumulate 2500 points on that account.

If you don’t already have a great rewards card, start shopping around to find one!  As much as we love our cash-back style rewards, I have several friends who swear by their airline miles cards, and my in-laws recently took a trip to Europe using their credit card reward miles.  If you’d prefer a card that gives you travel rewards, Nerdwallet has put together a good list of credit cards with sweet sign-up bonuses and rewards that can be redeemed for hotel stays and airline miles.  It’s a great place to start if you’re looking for a new card with good rewards.

What’s your favorite rewards credit card?  If you have a tip for the rest of us, please share!

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  1. Ultros says

    My wife and I also have four different rewards credit cards, including the Costco AmEx you mentioned. We find it easier to have only cash rewards. Two cards that everyone should know about:
    – Capital One has a couple of cards that will give you 1.5% back on all purchases. Best universal cash back out there.
    – We have an AmEx Blu Cash Preferred card that gives 6% on groceries, 3% on gas, and 3% on some department stores we never shop at. The “preferred” version has an annual fee, but there’s a no-fee version that gives only 3% back on groceries. As frugal people who cook most of our own food, groceries are one of our bigger spending categories, so having a groceries reward card is great.

    • frugalbabe says

      Those sound great! Hmmm… the AmEx Blue sounds like a pretty great option for groceries. Groceries is by far the biggest portion of our monthly budget, and we eat almost exclusively at home. I tend to prefer cards that don’t have an annual fee, but depending on the fee, the 6% version might be a better deal. I usually use our 2%-cash-back (to an IRA) AmEx for groceries. But I’m going to check into this one too. Thanks!

      • Christina Howell says

        We decided to get this card over a year ago after I did the math. The annual fee was waived for the first year, and is $75 each year. With what we spend on groceries (our largest budget category!), we earned that $75 back after the first month (it was a stock up month after all!). And we’ll still earn more than we would if we went with the no-fee version that gives 3%.

  2. Jasanna says

    Hi! I would love to know your methods for keeping track of spending on the various cards and in various categories. I’ve recently started this with my husband with the Chase Freedom and Chase Sapphire Preferred…and it’s complicated!!! :) We’re going more for the airline points, so we like the sign on bonuses and then the rotating categories like gas, that Chase gives cashback for. :)

    • frugalbabe says

      Jasanna, all I do is log onto each credit card site every few days and monitor the spending to make sure everything is accurate and accounted for. Then we pay the bills in full each month. We used to keep track of everything we spent, but it was just too tedious for us. It works great for some people (my mother has been doing it for 40+ years!), but we prefer to just set aside all of our savings first (so that we know how much we have to live on for the month) and then keep track of our spending as the month goes on by just checking on the credit card balance regularly. The bulk of the purchases are on one card, so that’s the important one. If it starts getting close to the amount we have set aside for expenses for the month, we know we need to not spend much until the billing cycle ends. It’s a very loose method, but it works for us because we’re frugal and focused on savings. If you’re not there yet, you might want to look for an online tracker that will let you keep track of your spending and rewards all in one place.

  3. Beatrice says

    Very timely post. My husband and I just started using the Fidelity Rewards card (2% cashback going towards our Fidelity Investment acct) and Amex Blue Cash Preferred card. We hope to just use these two cards most of the time and be able to maximize our rewards. One thing that we found out after signing up with the Amex Preferred is that not all supermarkets get 6% back. Only two supermarkets that we shop at were on their list; Most of the qualified supermarkets were ones not in our area. So we’ll have to evaluate after a year whether our spending/rebate justifies the $75 annual fee.

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