I remember years ago when I first got into blogging, I had no idea what rewards credit cards were. As I would read, I saw more and more “finance professionals”, well professional bloggers talking about the free vacation they took using a rewards credit card, or the money they saved through rewards programs. I was always intrigued by these posts; the only problem was that I couldn’t qualify for the offers that provided rewards. Eventually I started working on my credit and built it to the point where a rewards credit card wasn’t an unreasonable request.
I applied for 3 cards, and surprisingly enough, I was approved for all of them. I was incredibly happy because I had strategically picked the cards because they each offered different rewards I would enjoy. Over the years, I’ve made my fair share of credit card mistakes, but I’m thankful for them. If I didn’t make the mistakes, I wouldn’t be the credit card churner I am today! Another thing that happened over time was that I learned great ways to earn more and more rewards. Over time, I’ve dialed the earning more rewards process into a simple step by step checklist. So, today I decided I’d share it!
Earning More Credit Card Rewards – A Step By Step Guide
Step #1: Diversify Your Portfolio.
OK, I know we’re not talking about investment services, but we might as well be. With rewards credit cards, you’re investing time in planning and spending on your card to earn the highest return possible. When it comes to investments, it’s not best to put all of your eggs in one basket. The same goes for earning credit card rewards. Instead of choosing just one rewards credit card and focusing on earning one type of rewards, diversify. Maybe it’s best for you to have a travel rewards credit card, gas rewards card, and cash back rewards card. Simply think of different rewards programs that would best fit your needs!
Step #2: Clean Up Your Budget.
Your budget is going to play A HUGE role in your ability to maximize on the amount of rewards you earn using your credit card. We’ll get into how that works in the next step. First, it’s time to pull up your budget. Go through it and make sure everything is updated. If you don’t have a budget spreadsheet, click here to learn how to make one for free!
Step #3: Come Up With A Credit Card Spending Budget.
Dig through your budget and make a list of the monthly expenses that you pay using a debit card, or cash, but you know would accept credit card payments. These expenses generally include groceries, utilities, gas, entertainment, etc… Once you’ve figured out which of your monthly expenses fall in this category, add up the total you spend in those areas each month. This will become your monthly credit card spending limit. Don’t worry; I’m not giving you a play to dig you into debt…read further and you’ll understand!
Step #4: Set Up A Separate Savings Account With The Bank You Already Having A Checking And Savings Account with.
A special savings account is incredibly important to this process. Obviously, you’re not going to earn tons of interest on a savings account, but you’ll earn some interest. In the next steps, you’ll learn why this is relevant to maximizing the rewards you earn with your credit card.
Step #5: Start Using Your Credit Cards.
If you never use your credit cards, you’ll never earn rewards. It’s time to start swiping those things until you start a friction fire. OK, well maybe you shouldn’t be swiping that much, but you will need to use your cards. Stick to your credit card spending budget and start spending!
Step #6: Cover Your Butt!
When I first started using credit cards, I came to the quick realization that I had to pay back the debt once I got my first bill. I didn’t prepare to pay it off, to be honest, I didn’t prepare for anything. I ended up paying for three months on that balance which means I paid interest. Because I paid interest, I didn’t earn rewards, I paid for them. Here’s how to make sure the same thing doesn’t happen to you…and why it’s important to have a savings account dedicated to this process.
At the end of every day, when you’re done spending money for the day, get online and transfer the total amount of money that you’ve spent on your credit card from your checking to your savings account. Doing so will do two things for you…
- Make Sure You Never Pay Interest – Credit cards have grace periods. Because of this, if you pay your balance off entirely within a specified period of time (Usually 21 Days), you won’t be charged interest on your purchases. By putting the money to pay your debts off in savings every night, you’ll be more than prepared to pay within the grace period and avoid interest.
- Earn More – Savings accounts pay you interest. Granted, you’re not going to make much more than pennies on the average savings account, but remember, pennies add up to dollars! By storing the money you plan to use to pay off your credit card debt in a savings account, you’ll earn interest as the money sits! That’s what I call double earning!
Step #7: Get In The Habit Of Making Bi-Weekly Payments
As I mentioned above, credit cards have grace periods, which I think are beautiful things. Grace periods allow you to avoid 100% of the interest you would generally be charged on credit card debt. The only catch to the grace period is…well, you’ve gotta catch it! Because most grace periods are 21 days, it’s best to get into the habit of paying your balance off in full every two weeks. This shouldn’t be hard because you’ve already got the money waiting in your savings account…where it’s earning interest!
So There You Have It
These seven steps are all it takes to earn free vacations, free gas, cash back and more. They’ve worked for me for quite some time now, now it’s time for them to work for you!
Do you churn rewards credit cards? If so, is there anything you would add to this process? If not, why?