A little bit of planning goes a long way in maximizing the earnings you accumulate on your cash back credit card. Here are some tips to get you started:
- Pay your regular monthly bills with your cash back card to earn cash back on your telephone bills, mortgage, cable bills, and so on.
- Get a card for all members in the household responsible for making purchases so you earn cash back on all purchases.
- Look for cards that allow you to leverage your spending. Many cards, for example, offer a 5% cash back on purchases made in supermarkets, drug stores, and gas stations and 1% on all purchases.
Some cards offer 5% cash back on other types of purchases as well, e.g., in bookstores, restaurants, and home improvement stores. If you plan to remodel your home, for example, a card that gives you 5% cash back on purchases in home improvement stores can produce significant savings over time.
If you run a small business, look into getting a business card that will give you 5% cash back on such qualifying purchases as computers and electronics, office supplies, phone usage, and ground transportation, i.e., cab, limousines, train or bus. If you have employees who make purchases for the business, get a card issued for them as well. Business cards have the added advantage that they typically don’t have a ceiling on how much cash back you can earn.
Be sure that you pay off your balance in full on your cash back card each month. Otherwise you end up paying more in interest than you earn in cash back rewards. If you need to carry a balance, look for a card that offers the lowest possible interest rate instead.
If possible, keep two cards, one with cash back benefits and one with a low interest rate. Use the cash back card for expenditures that offer a high cash back rate, such as purchases in supermarkets, and pay that card off every month. Use the other card for expenses that you plan to pay off over time.
