How to maximize cash back with your credit card

There’s more to maximizing cash back than just using a rewards credit card for spending and bills. You’ll also want to make sure you have the right cash back credit card to begin with and that you have a handle on the best redemption options available — and when to make them.

If you want some tips on how to pick the right card but you also want to squeeze the most out of your cash back rewards possible, keep reading for an overview of some simple moves you can work into your rewards strategy right away.

1. Choose the right cash back cards

The first step required to maximize cash back is ensuring you choose the absolute best card (or cards) for the way you spend. There are flat-rate cash back credit cards and bonus category cards to choose from, and many consumers use a few different cash back credit cards to earn more rewards on everything they buy.

Evaluate your spending habits

Before you switch up your credit card spending strategy or consider applying for a new credit card, you should spend some time analyzing your cash flow. How much money are you spending per month? Per year? What categories do you spend the most in? What do you ultimately want or need from a rewards credit card?

Start by using a budgeting app or a pen and paper to determine how much you spend each month and on what. Whether you’re ordering food delivery every Friday night or traveling with your favorite airline each month, make sure you understand where your money is going.

Understanding how much you spend helps you estimate what your rewards yield will be each year — making it easier to determine if an annual fee is worth it. If you don’t spend enough on a credit card each year to offset a card’s annual fee, that card is probably not the best option for you, so you should opt for a card without an annual fee that fits your needs instead.

Once you’ve noted how you’re using your credit card, you can identify which type of credit card best suits your lifestyle and typical spending habits.

Compare sign-up offers

If you’re in the market for a new cash back card, an initial sign-up bonus or welcome offer can accelerate your earnings. Fortunately, most cash back credit cards have excellent welcome offers with easy to meet minimum spending requirements.

Some of the best cash back sign-up bonuses available right now include the:

1. Blue Cash Preferred® Card from American Express: $250 cash back bonus after spending $3,000 on purchases within six months from account opening. 
2. Wells Fargo Active Cash® Card: $200 cash back bonus after you spend $500 on purchases within three months of account opening.
3. Discover it® Cash Back: Double all of the cash back you earn within the first year of card ownership with Cashback Match. 
4. Ink Business Unlimited® Credit Card: $900 cash back bonus after spending $6,000 on purchases in the first three months from account opening.

2. Combine boosted category cards with flat-rate cards

One of the most popular strategies for maximizing cash back is to pair a flat-rate cash back credit card with one that earns boosted rewards in certain spending categories. This could mean pairing a flat-rate card with one that earns elevated rates in everyday categories like grocery shopping or gas station purchases, or it could mean pairing a flat-rate card with one that has rotating bonus categories. Rotating category cards require activation but offer high rates of cash back in return. Let’s break down these two strategies further: 

Flat-rate cash back cards and boosted category cash back cards

The best flat-rate cash back credit cards typically offer between 1.5 percent and 2 percent cash back on all purchases with no spending cap. These pair nicely with cards offering cash back in select bonus categories because these cards typically only earn 1 percent on purchases outside of those bonus categories. 

But, which cards should you pair up for more rewards? Let’s say that you chose the Wells Fargo Active Cash for your flat-rate card, which offers 2 percent back on all purchases. Let’s also say, for example, that your biggest expense each month is always groceries. To get the most out of a card, you’d want to choose one that gives solid cash back on grocery purchases. 

The no-annual-fee Blue Cash Everyday® Card from American Express is one of the best credit cards for groceries, offering cardholders: 

• 3 percent cash back at U.S. supermarkets (up to $6,000 per year, then 1 percent)
• 3 percent back at U.S. gas stations and on U.S. online retail purchases (on up to $6,000 per category per year, then 1 percent)
• 1 percent on all other purchases

If you spent $500 on groceries and $1,000 in miscellaneous purchases each month, then you’d earn $15 in cash back from your Blue Cash Everyday card and $20 from your Active Cash card. That would be a total of $35 in cash back each month, and that’s not including any cash back from purchases that could fall into the Blue Cash Everyday card’s gas station or online retail purchase categories. 

Ryan Flanigan, a credit cards expert and writer at Bankrate, likes to use this strategy for two of his Bank of America credit cards and two of his Chase cards. For others looking to pair a flat-rate card and a boosted category cash back card this way, he offers the following advice:

Flat-rate cash back cards and rotating category cash back cards

For this strategy, you’ll use your flat-rate cash back card for nearly everything except purchases that can be covered by your rotating category card. Rotating category credit cards work by changing what categories can earn cash back, usually per month or per quarter. These cards require activation to earn rewards, so it’s important to keep a close eye on your issuer’s cash back calendar and activate the bonus categories when it’s time. 

Let’s say that you still have your Wells Fargo Active Cash, and you’ve paired it with the Discover it Cash Back, which offers 5 percent cash back on up to $1,500 in activated rotating bonus category spending each quarter (then 1 percent). Discover doesn’t announce all of the year’s categories at once. Instead, it waits until the end of each quarter to announce the next quarter’s categories. 

If you were able to max out your spending cap each quarter by spending $500 in your activated bonus category each month, you’d earn $25 monthly from your Discover it Cash Back. If you also spent $1,000 on other purchases with your Active Cash card, you’d earn an additional $20. That would be a total of $45 each month.

If your cash back card has rotating bonus categories, you’re eligible for the bonus cash back rate. Otherwise, you’ll only earn the base rate, which is usually 1 percent on all your spending.

3. Stay organized when it comes to your cards 

If you’re using multiple cards as part of your cash back strategy, it’s important to remember which cards are best used when. To stay organized, give each card a helpful nickname in your digital wallet or slip a hand-written legend into your wallet so you’re prepared to use the right card at the right moment. 

4. Take advantage of issuer shopping portals

Before you shop, whether in-person or online, look for card-linked offers from your credit card issuer. Some popular shopping portals include: 

• Shop Through Chase: Stores in the Chase shopping portal frequently include options like Walmart, Sephora, Best Buy and Macy’s. 
• Barclays RewardsBoost: At the time of writing, you can find deals for Nike, CVS, Lenovo and more through the Barclays shopping portal.
• Capital One Shopping: Unlike other issuer shopping portals, Capital One Shopping doesn’t require you to be a cardholder to access the portal. At the time of writing, you can find deals from brands like Adidas, Chewy and Target. 

Some issuers offer additional rewards opportunities, as well. American Express, Chase, and Capital One have programs — Amex Offers, Chase Offers and Capital One Offers, respectively — through which you can opt in to earn additional cash back from select retailers.

5. Make the most of cash back apps

If you want to earn more cash back for online purchases, you often can increase your earnings through the use of cash back apps and websites.

Cash back apps and sites like Upside, Dosh, Ibotta and Rakuten (formerly Ebates) give you a percentage of your spending back on qualifying purchases — on top of the cash back you’re earning on your credit card. For example, Rakuten lets you earn additional cash back when you click through the website before you shop with stores like Kohl’s, Macy’s, Nordstrom, Old Navy and Priceline.com.

6. Use your cash back wisely

While maximizing cash back earned on spending is important, that’s only part of the equation. You also need to redeem your cash back in ways that make sense for your goals, whether you want to reduce the amount you owe on your credit card bill, you want to splurge for a fun purchase or you hope to utilize rewards to improve your finances in some way.

Consider the following tips to get the most out of your cash back rewards each year:

Redeem your cash back as statement credits

One of the easiest ways to redeem cash back is for statement credits to your account. This redemption effectively lowers the amount you owe on your credit card bill, thus helping you save money over time. If you sign up for the Wells Fargo Active Cash® Card to earn 2 percent cash back on all purchases and redeem your rewards for cash back, for example, you would ultimately save 2 percent on everything you buy with your card.

Just remember that rewards only get you “ahead” if you pay your credit card bill in full each month and avoid interest. If you’re paying 20 percent or more in credit card interest, for example, only to be earning 2 percent cash back, you’re not doing yourself any favors.

Save your cash back for a big purchase

You can also save up your rewards for a purchase you want to make down the line, whether it’s a splurge purchase you don’t want to cover in cash or you need to buy something for your everyday life. In either case, most cash back credit cards let you grow your rewards balance over time until you’re ready to use it.

Use your cash back to pay down debt

You can also use rewards to pay off some types of debt, either directly depending on the card you have or indirectly by redeeming for cash back. In terms of options that let you redeem rewards for debt payments, some Wells Fargo credit cards (including the Wells Fargo Active Cash® Card) let you redeem cash back toward a Wells Fargo mortgage in addition to options like gift cards and statement credits.

Many cash back credit cards also let you redeem rewards for a check in the mail, which you could deposit into a bank account and use for debt payments.

The bottom line

If you take a little time to spend strategically, you’ll be raking in cash back rewards before you know it. You can maximize cash back from your credit card by using one of the best cash back credit cards on the market for as many of your everyday purchases as possible.

In the meantime, you’ll also want to avoid carrying a balance so you won’t have to pay interest on your purchases. With the average credit card APR currently over 20 percent, racking up rewards won’t make any sense if you also rack up long-term debt.

The Bank of America content in this post was last updated on October 11, 2024.