Cashback Bonus: Maximize Credit Card Rewards

By Matt

Chances are you already have a credit card that offers some type of a reward structure. These reward programs generally allow the cardholder to accumulate points or earn cashback when they make purchases with their credit card. In the exceedingly competitive credit card market reward programs are offered by financial institutions as incentive for the consumer to use their card. If you fully understand how reward structures are formulated, you can maximize the cashback bonus that you receive.

Types of bonuses available

The most common bonus offered by credit cards is the initial sign up bonus. With a cashback credit card, the bonus is usually between $50 and $150 and requires the cardholder to spend a certain amount of money within a set timeframe for the bonus to be released. For example, a card offering a $100 sign up bonus might be released only once $500 worth of purchases are made in the first three months. Other typical bonuses include a premium cashback rate, usually five percent, for purchases made at select categories of retailers (e.g. gas stations or grocery stores) or at select sponsored retail partners. Discounts are often offered when cash earned through the program is used to buy products or services through the credit cards website.

Click here to compare credit card offers: 0% intro APR

Increase your rewards

If your goal is to maximize the benefits of your reward program then it is important to fully understand how they are calculated and use the bonuses to your benefit.

• If a credit card offers a premium on grocery purchases then exclusively use that card for purchases at the supermarket.
• Take advantage of discounted gift cards and online purchases. Some cards will offer $25 gift cards for $20.  This offer would increase the value of your cashback by 20%. Items available through online redemption are also usually discounted from retail prices. Shop and compare.
• Keep an eye on your reward website. Gift cards and other products occasionally go on clearance and steep discounts (sometimes up to 75%) are available.
• If you carry a balance on your current credit card it is a good idea to look for a card that offers 0% APR on balance transfers. Even a modest $1,000 balance will see annual savings of $150 if you are currently paying 15%.

Three items that will offset your earnings

1. Annual fees – If a credit card charges a $89 annual fee then you should deduct $89 from any savings that you anticipate.
2. Rotating premium categories – Many cashback cards rotate the category of retailers where you earn a premium reward rate. Monitor the premiums offered to ensure that you are earning what you think you are earning.
3. Thresholds – Some cards require a certain amount of cashback to be earned in a year before redemption can take place. If the threshold is $100 and you earned $90 in rewards you could potentially lose that money.

Cashback bonuses can be maximized if you understand how the reward structure works. Make the most of your reward program by letting your credit card work for you.