Pay the full statement balance every month, or interest can cancel the rewards your credit card earns. Then put each purchase on the card that pays the most for it, and before you redeem points, work out what each one would be worth in cents.
Which of the moves below matter most depends on how your card earns rewards. A flat-rate card pays the same cash back rate on every purchase. A category card pays a higher rate in a few spending categories, such as groceries or gas, and a lower rate on everything else. A flexible points card earns points or miles that you can take as cash, use for travel booked through the card’s own site, or move to airline and hotel loyalty programs.
With any kind of card, paying in full keeps what you earn, and a sign-up bonus adds a lump sum on top of it. Pairing a category card with a flat-rate card earns the higher of the two rates on each purchase. The remaining moves are about points and miles, whose value depends on how you redeem them.
1. Pay the Statement Balance, Not the Minimum, and Your Card Stays Interest-Free
A 2% card pays $20 on $1,000 of purchases. Pay that $1,000 in full and you keep all $20; leave it unpaid for a month at 22% a year and about $18 goes to interest.
Most credit cards charge no interest on purchases as long as you pay the full statement balance by its due date. Pay even a dollar less and the unpaid part collects interest, and new purchases can too, often at 20% a year or more. Make that full amount your payment every month, even when the minimum looks easier. Read More →
2. Sign-Up Bonuses on Credit Cards Are the Fastest Way to Earn Significant Rewards
A credit card sign-up bonus puts a large reward on a small amount of spending. A $200 bonus for $500 in purchases pays as much as 2% cash back on $10,000. Apply when expenses you already have coming will meet the spending requirement, and pay the balance in full so interest doesn’t erase the bonus. Read More →
3. Pairing a Category Card With a Flat-Rate Card Maximizes Every Purchase
No single cash back card pays the top rate on everything you buy. Pair a category card that pays extra where you spend the most with a no-fee card that pays a flat 2% everywhere, and put every purchase on whichever card pays more. Make sure the category card’s extra rewards exceed any fee. Read More →
4. Points or Cash Back - The Right Strategy Depends on How You'll Redeem
Price each point at the redemption you’ll actually use before choosing points or cash back. Statement credits and gift cards top out around a penny a point, so two points per dollar pays 2% or less. If you won’t book travel that gets more than a cent per point, choose cash back. Read More →
5. Value Credit Card Points in Cents - Skip Bank Point Redemptions Under a Cent
Before you redeem credit card points, subtract any taxes you’d still pay from the cash price of what you’re getting, divide by the points it costs, and multiply by 100 for cents per point. If your points can go to cash back or travel at about a cent each, as Chase Ultimate Rewards points can, skip anything under that. Read More →
6. Transfer Card Points to Airline Partners - Same Flight, Often Far Fewer Points
NerdWallet values Chase, Amex, and Citi points and Capital One miles at 1.2 to 1.8 cents each through their best airline or hotel partners, more than the one-cent minimum set in the previous entry.
Flexible credit card points can usually move into an airline’s frequent flyer program at one point per mile. There, the same flight often costs far fewer points than in your card’s travel portal, plus taxes and fees in cash. Find the seat on the airline’s site first, then transfer only what the booking needs, since transfers are final. Read More →
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