Cash rewards credit cards are credit cards that come with a cash-back offer, usually as a credit on your statement or a direct deposit to your bank account. Each credit card has its own rewards rules, but most operate on a percentage or points system. Knowing how to maximize credit card rewards will allow you to fully take advantage of these types of credit cards.

Read on to find out how to maximize cash rewards cards and get the most for your money.

Rewards Credit Cards: How to Accumulate and Use Your Rewards

There are tons of different types of credit cards out there — with everything from standard credit cards to secured credit cards, balance transfer credit cards and, of course, rewards credit cards. Credit card offers like cash back or sign-up bonuses entice users with incentives for making credit card purchases by awarding them points or a percentage of cash back for each dollar they spend. Rewards, be them travel miles or cash back, can be accumulated and then redeemed.

Rewards credit cards come in many different forms and some might be better suited for your spending than others so it’s important to know the difference. Here are some of the most common types of rewards credit cards:

Learn: How Many Credit Cards Should I Have?

General Rewards Point Credit Cards

Rewards credit cards give customer a reward each time they charge a purchase to their card that can then be redeemed. Once you’ve accumulated a certain minimum number of points, you can redeem them in the form of rewards like gift cards, electronics, jewelry and other merchandise. Some rewards credit cards allow you to redeem your points in the form of cash, but the cash option is often valued at a lower rate than if you redeemed it for something else, depending on the card’s structure.

You accumulate credit card points or cash back by using your rewards credit card for purchases. The usual baseline for a rewards points credit cards is that you earn at least 1 point per $1 spent on all purchases. Many credit card brands allow you to earn many more points per $1 spent, especially when the credit card rewards you for spending on specific items like groceries or gas depending on the featured bonus category, which typically changes every few months.

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Cash-Back Rewards Credit Cards

Cash-back credit cards accumulate rewards in the same manner as general rewards credit cards, but you receive cash rewards rather than rewards points. Most cash-back credit cards usually earn about 1 percent or 2 percent cash back on all purchases. Like with rewards points credit cards, you can get a bigger bang for your buck with cash-back credit cards that offer more than 1 percent back. Some cash-back credit cards charge annual fees because cash-back programs are more expensive than rewards points programs for credit card companies. Be sure to read the fine print so you fully understand how the rewards system for a particular card works before you apply.

Related: The Best Cash-Back Credit Cards

Hotel and Travel Rewards Credit Cards

Hotel and travel credit cards are rewards credit cards enable you to earn points on all purchases that can be redeemed for travel-related perks like room upgrades, free nights and exclusive accommodations. Equally important, most hotel and travel credit cards award you bonus points for credit card purchases made at a branded hotel or travel chain so choose a card that rewards you for using the hotel chain you prefer.

Airline Mile and Frequent Flyer Credit Cards

There is some overlap between these types of cards and travel credit cards. However, airline mile and frequent flyer credit cards really are their own breed of rewards credit card. These types of credit cards enable users to earn airline mile credits every time they make a purchase on their card.

Airline mile and frequent flyer credit cards fall into two buckets:

  • Generic airline miles cards: With a generic airline miles card, you can redeem your reward points for travel on any airline or travel site.
  • Airline-specific credit cards: With an airline-specific credit card, you accumulate points both by using your credit card for purchases and for flying on the associated airline. You redeem your reward points through the specified airline, though these cards often come with additional perks.

 Find Out: Best Travel Reward Credit Cards

Retail Rewards Credit Cards

Retail rewards credit cards are ones that are co-branded with a major retailer. Some notable examples of this include Amazon.com, Disney and Uber credit cards. With these types of rewards credit cards, users usually earn points on all purchases but earn additional points for using their credit card for purchases at the co-branded retailer so only choose a card like this if you are a frequent customer of the brand it is associated with.

Gas Rewards Credit Cards

Gas cards award you points or rebates when you use your credit card to purchase gas. Like other rewards credit cards, gas card users usually get 1 point or 1 percent cash back on everyday purchases. In addition, they also award you with significantly more points or greater rebates when spending specifically on gas or auto repair and maintenance. Many gas cards offer as much as 5 percent back for buying gas, and some gas cards reward you more for filling up at particular gas station chains.

See: Best Balance Transfer Credit Cards

Maximize Credit Card Rewards With Spending Categories

Some cash rewards credit cards let you earn more money back when you spend in certain categories, and this is a great way to maximize what you earn. For example, a card might have 3 percent cash back on purchases at grocery stores and 1 percent back on all other purchases. Making it a priority to use that card whenever you’re shopping for items in bonus rewards category maximizes your earnings.

A few rewards credit cards offer cash back in different categories each calendar quarter. For instance, you might earn more at wholesale clubs one quarter, on fuel and dining out another quarter, on groceries in the third quarter and on select online purchases for the final quarter. The key to maximizing cash rewards with such cards is to plan ahead. For example, stock up at the wholesale club on nonperishable goods such as toilet paper during the quarter when you’ll be rewarded most and do your holiday shopping in the quarter that pays you most to buy things online. Some cards require you to manually opt-in each quarter, so pay attention to your emails and credit card app to opt-in when necessary.

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Maximize Spending With Your Card

Simply using your rewards card is one of the best ways to maximize rewards. If you have a card that offers 2 percent cash back on all purchases, for example, and you spend $1,000 every month with that card, you’ll earn $240 for the year.

The idea is to spend on things you would already be buying and pay off your balance each month to avoid interest charges (which diminish the value of your cash back). If you use your cash rewards card to pay for groceries, fuel and other regular expenses, you can earn a surprising amount back every year.

Bear in mind that earning credit card points is all well and good, but to effectively maximize your cash rewards, you need to be disciplined. It is very easy to get caught up in credit card spending, especially when there’s an incentive to use it, on top of its convenience. As with any credit card, when using rewards credit cards you’ll want to keep your credit utilization ratio ideally at 30 percent or below. Try to pay off the balance each month or enough of it to get below the 30 percent line. All that said, rewards credit cards can be a superior option to using cash or a debit card both in terms of rewards and security against fraudulent charges. Specifically, rewards credit cards are especially helpful when used for purchases you’d already be making anyway.

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