Modern credit cards are so rewarding that it’s often hard to keep track of all the ways to earn cash back. But if you can score your signup bonus, tweak your spending to max out your highest rewards categories, and use up your perks, you’ll be getting the most out of your card.

Back in 1986, Sears debuted the Discover Card with a radical idea: If we’re charging merchants a transaction fee, why don’t we give our cardholders a little kickback? 

Thus, the rewards card was born. 

Applications for the Discover Card skyrocketed 400%, and as one Cold War ended, another began; the revolutionary Discover kicked off a credit card arms race to see who could have the most rewarding credit card. 

Today, the amount of cash back and perks your card has borders on comical. 

Today, credit cards have bursting arsenals of perks. Cash back, signup bonuses, you name it. There are even perks buried in the fine print you may not have known you had – and could be worth $10,000+ in the right context. 

Maximize your cash back 

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Cash back used to be simple – 1% back on every purchase. Nowadays, you need an accounting degree to track all the tiers, quarterly bonus categories, and more. 

Some cards are still super straightforward. The Citi® Double Cash Card offers a blanket 2% cash back on everything, you don’t really have to worry about how you use your card on a daily basis. 

But your card may be more complex. The Chase Sapphire Preferred® Card, for example, has six reward tiers, some as granular as “3X points on online grocery shopping.”

So if you’ve got a card with messy, scattered rewards, what’s the best way to track it all and maximize your cash back?

1% to 1.5% cash back shouldn’t influence a purchase decision

Credit card companies don’t offer cash back out of the goodness of their hearts. Rather, it’s psychology. They want you to feel comfortable spending more so they earn more. And if you spend too much, they get to charge you fees and interest. 

That’s why it’s critical never to let small cash back rewards influence a purchase decision. “If I put my Peloton on my credit card, I’ll get 1.5% or $15 cash back – free lunch!”

Adjust where you make everyday purchases to maximize your 2% to 5% cash back categories

Credit card rewards are so competitive that we’re now seeing cards offering 5% cash back with no annual fee. WIld. 

Even still, 5% cash back shouldn’t influence how much you spend – but it’s definitely enough to consider where you’re spending. 

For example, if your Discover card is offering 5% cash back at Target, it’s probably worth switching from Publix to Target for a few months. Or if you’ve never used PayPal before and you’re now getting 5% cash back, it’s worth setting up an account and checking the PayPal box during online checkout. 

See what I’m getting at? Credit card companies offer 5% cash back because they want you to spend more. If you spend too much, they even get to charge you a high interest rate and a late fee. 

So the key to maximizing cash back isn’t to spend more – it’s to spend more strategically

Mind which rewards are unlimited (and which aren’t)

At present, no credit card company can afford to offer unlimited 5% or even 3% cash back. Hopefully one day soon. 

Until then, any card that offers 5% cash back will typically cap it after about $1,500 worth of spending (depends on your card, though). 

How To You Use A Credit Card To Make Money And Earn Extra Cash - Chase example

That means the most you can earn in three months is $1,500 x 5% = $75. Something to keep in mind before a big purchase – if you’re considering a $2,000 Peloton, you’ll only get 5% on the first $1,500. 

Earn your signup bonus

This one may seem obvious, but you definitely don’t want to forget to score that sweet, sweet signup bonus. 

How To You Use A Credit Card To Make Money And Earn Extra Cash - Chase sign-up bonus

Roughly half of cards these days have a signup bonus, and it’s more common among cards with an annual fee. The bonus for no-fee cards usually tops out at $250, and paid cards can be as high as $1,000. 

It’s easy cash you don’t want to miss. 

So, do this right now: check your credit card(s) terms and conditions and see if there’s a signup bonus waiting for you. If so, have you already spent enough to trigger it? 

If you’ve already met the threshold but don’t see your cash, don’t fret just yet. Signup bonuses can take up to eight weeks to appear. Even still, if you’d like it faster, it doesn’t hurt to call up and ask nicely. I’ve found that having a friendly chat with my credit card company gets me what I want 70% of the time.

If you haven’t spent enough to trigger your bonus, and time is running short, is it worth going on a small spending spree to get your bonus?

Well, it depends. You don’t want to overspend just to trigger a small bonus. For example, if you’re $4,000 away from triggering a $400 bonus, it’s probably not worth it. That’s really just 10% off your next $4,000 worth of spending – and if you don’t need to buy anything, you may just want to cut your losses (or ask your credit card company for an extension). 

But if you’re just $400 away from triggering a $250 bonus, that’s worth a little extra spending to reach. It amounts to 62.5% off your next $400 worth of spending – a deal, and surely you can find $400 worth of reasonable essentials to buy within a few weeks. If your regular expenses won’t cover the gap, do your Christmas shopping early!

Does it make sense to keep your card after you get your signup bonus? 

Signup bonuses are a common incentive to get new cardholders in the door. 

But once you’ve gotten your bonus, is it worth keeping the card? Or should you keep applying for a new credit card every couple of months to keep scoring signup bonuses?

Well, the issue with the latter strategy is that credit card applications hurt your credit score. One day, your student loan servicer or mortgage lender is going to be looking at your credit history. You don’t want them to see that you applied for 11 credit cards in 18 months and wonder: 

Who is this guy? Does he work for El Chapo? 

That being said, it’s generally considered safe for your credit score if you wait to apply for a new line of credit every 8 to 12 months. If after 8 months you decide that the grass is greener at another bank, it’s smart to shop around

Book travel through your card issuer’s portal

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At some point, the major card issuers saw how much money Expedia and Kayak were making and decided to create their own versions. Chase, Capital One, and others now have their own travel booking portals through which you can book flights, hotels, and rental cars. 

And to the banks’ credit, these are no cheap imitations. Here are four reasons to use your bank’s travel portal instead of booking through Kayak or Delta

  • You’ll (often) get 5% cash back. The primary incentive to book through a bank’s travel portal is that they’ll typically reimburse you for up to 5% on hotels and rental cars. Chase Ultimate Rewards includes flights.
  • Better perks. These credit card travel portals are designed from the ground up to be more appealing than Kayak et al, so you’ll often see unique perks like Capital One Travel’s price drop protection.
  • Lower rates. Most banks will price-match sites like Expedia and Kayak, so you can find the best rate, show it to them for a match, and then get 5% cash back on the lowest rate.
  • Better selection. Airlines are notorious for having blackout dates when you can’t book an award ticket. But since your bank is technically paying the airline for your seat, you won’t have such restrictions when booking with credit card points.
  • More rewards points. Finally, Hertz and Delta won’t give additional rewards points for booking award tickets or rentals – but if you book through your bank using credit card points, you’ll earn cash back and loyalty points.

How To You Use A Credit Card To Make Money And Earn Extra Cash - Capital One Travel

In summary, credit card travel portals have come a long way. It may sound crazy, but you’re much more likely to save money booking through Capital One Travel than through Kayak. 

Know your perks – and use them

When they hear “credit card perks,” most folks think of airport lounge access and maybe slightly discounted event tickets. 

But what if I told you that your credit card could repair your smartphone, double your laptop warranty, or even reimburse you for a last-minute trip cancellation? 

Rewards card perks can be amazing, and yet, credit card companies are weirdly shy about them. You often won’t even find your perks until you’re digging through the cardholder agreement:

How To You Use A Credit Card To Make Money And Earn Extra Cash - Cardholder agreement 

But it’s definitely worth the dig, because I guarantee you’ll find some truffles. 

Here are some increasingly common credit card perks, and how much cash they could save you (if you remember that you have them!): 

  • Cell phone protection. Covers loss, damage, or theft of your phone, minus a $25 deductible, up to $600 per claim.
  • Auto rental damage liability waiver. Basically free collision insurance on your rental car. Saves you ~$50 to $100 per rental and lends peace of mind.
  • Extended warranty protection. Purchase an item with your card that has a manufacturer’s warranty and your card issuer will automatically double it. Potentially worth thousands for TVs, laptops, etc. (doesn’t apply to cars, womp womp).
  • Trip delay/cancellation insurance. If you or an immediate family member misses a trip due to sickness, a death in the family, severe weather, or even jury duty, your card issuer will cover your trip for up to $20,000 or thereabouts. If you’re still able to make it but are delayed for at least 12 hours, you can get up to $500 in delay reimbursement.
  • Extended return window. If an eligible item is stolen or damaged within 90 days of purchase, you’ll get reimbursed for the replacement/repair for up to $10,000 per claim.
  • Return protection. This is a newer perk with Bank of America cards, and one of my favorites. If you’re dissatisfied with an item you buy within 90 days, and the retailer won’t take it back, you can ship it back to Bank of America’s “Benefits Administrator” instead in like-new condition for full reimbursement. 

So, while 5% cash back may only be worth $75 x 4 = $300 per year, your perks alone could be worth $20,000. 

That’s why it (literally) pays to know what perks you have and when to use them!

Perform a balance transfer 

I like to call a balance transfer “a hidden signup bonus” because although it may not be as sexy as cash back, it can save you way more than $250 in the long run.

A balance transfer is when you move credit card debt from one card to another. The idea is to move your balance onto a new card with a lower interest rate so you can save on interest. 

If that piques your interest, check out our article: 0% APR Balance Transfers Can Save Thousands In Interest, But Should You Really Apply?

Now, balance transfers used to be somewhat cost-prohibitive because card issuers would charge a 5% fee. And to the average American who’s $6,194 in credit card debt, $309.70 is a hefty fee. 

But recently most balance transfer fees have dropped to 3%. I’ll spare you the messy math, but a $185 fee is definitely worth going from 29.99% interest rate to 0% interest rate on a $1,500+ balance. 

In summary, if you’re currently in credit card debt, a 0% APR balance transfer will be a better “signup bonus” than $250 cash (but some cards will let you have both). 

Read more: Best Balance Transfer Credit Cards

Switch to a better card

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Last but not least, if getting cash back from your current card feels like squeezing water from a stone, it might be time to shop around for a replacement. 

Thankfully, the world is your oyster. There are tons of cards out there with no fees, tasty signup bonuses, and surprisingly high cash back. Check ou our list of the Best Rewards Credit Cards

Heck, even a card with an annual fee might make sense for you. Right off the bat, many of them have much higher signup bonuses, so they basically pay for themselves. Check out When Is An Annual Fee Credit Card Worth it? 

Just keep in mind that credit card applications knock a few points off your credit score – so you may not want to apply for a credit card and an auto loan at the same time. 

Summary

Sears may not have survived, but the legacy of the original Discover card lives on. Today’s credit cards are so rewarding that it’s often hard to keep track of – and maximize – all of the ways to save and earn money. 

If I were to extract the three most important takeaways from this piece, they’d be:

  1. Don’t let your credit card rewards subconsciously increase your spending habits
  2. Make small adjustments to where you spend money to get your rotating 5% cash back, and 
  3. Know your perks, and don’t miss a chance to use them!

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About the author

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Chris helps people under 30 prosper - both financially and emotionally. In addition to publishing personal finance advice, Chris speaks on the topics of positive psychology and leadership. For speaking inquiries, check out his CAMPUSPEAK page, connect with him on Instagram, or watch his TEDx talk.