Maximize Your Credit Card Rewards Points to Fight Inflation

With prices soaring, your credit card can help you save

Hands holding credit card in one hand and cash back in the other hand.

iStock / Getty Images

Donna Fuscaldo,

AARP

En español

Published August 08, 2022

With prices soaring for everything from food to utility bills, consumers are looking for ways to save. Increasingly they are turning to credit card reward points to fight inflation.

It makes sense, given America's penchant for credit cards. According to a recent Wells Fargo survey, 71 percent of people living in the U.S. have a credit card that offers cash back or rewards. Of those cardholders, nearly half (49 percent) are relying on rewards points to offset some of the costs of everyday purchases.

But they aren’t doing it as efficiently as they could. The same Wells Fargo survey found only 53 percent of rewards cardholders focus on high-value categories when they use their card, while 38 percent have not cashed in their credit card rewards or offers this year.

“It’s important for consumers to fully understand all of the benefits their rewards card offers in order to make the most of their purchases and to help defray some of the cost of rising inflation,” says Krista Phillips, head of branded cards and marketing at Wells Fargo. “If you aren’t aware or don’t prioritize the categories that can earn you the most rewards, you may be leaving money on the table.”

The good news is there are ways to maximize your savings, including these seven:

1. Know your spending style

A rewards card that gives you the most points when you travel wouldn’t make sense if you’re a homebody. Nor would a credit card with cash back at the pump if you live in the city and don’t own a car. To get the most of your rewards points, it's important to understand the type of spender you are. “You ultimately want to get a credit card that gives you more cash back, points or airline miles based on the categories you spend the most,” says budgeting expert Andrea Woroch. “Look for a credit card that gives you more back for the category you spent the most.”

If you’re a general shopper, a flat-rate cashback credit card may be a good option. You’ll earn points across all types of purchases regardless of where you’re spending, Woroch adds.

2. Use your existing rewards

Lots of credit card holders are sitting on rewards that have been accumulating, sometimes for years. Either they’re waiting for the perfect time to redeem them, are unsure how to use them or don’t even know how much they have. Either way, they are leaving money on the table that can go to fight inflation. “The last thing you want is to have them expire or cancel the card and not use them,” says Nick Ewen, director of content at The Points Guy travel website. “You can lose tens of thousands or hundreds of thousands of points.”

The easiest way to redeem points is online. Once you set up an online account with the credit card company or bank, reward balances are typically displayed on the dashboard. You can also call customer service for help.

3. Do your homework

Reward cards offer all sorts of perks and bonuses, depending on how you shop and spend. To get the most out of a card, take the time to dig in and do your homework. You want to understand all the benefits and rewards you’re getting. “Many cards have generous value adds that consumers may not be aware of, including welcome bonuses, access to concierge services, cellphone protection when customers pay their monthly cellphone bill with their card, and more,” Phillips says. Don’t make it a once-a-year kind of thing either. Your credit card may offer extra rewards on rotating categories every quarter or month and/or provide bonuses when you shop at specific retailers.

4. Never carry a balance

The key to fully benefiting from credit card rewards is to avoid paying interest. You achieve that by not carrying a balance. “If you carry a balance, the interest rate you pay on that purchase will far exceed any reward you earn and will wash out any benefit of paying with that card,” Woroch says. “Treat credit like a debit and only charge what you know you can pay off in full right away or by the end of the month.” To really keep it in check, Woroch says to pay the purchases off immediately after making them or to pay the credit card balance by the end of the week.

5. Add an authorized user

This works only if you trust the person you’re adding will cover his or her purchases each month. There are scammers out there, so tread carefully. Just because it's a caregiver or so-called friend doesn’t mean they can be trusted. By adding an authorized user, you’ll be able to earn rewards on all their spending in addition to yours. That will increase the rewards points and thus the savings.

6. Use a rewards card for big-ticket items

If you’re planning on buying a pricey item and have the cash set aside, put it on your rewards card and immediately pay off the balance. That will boost the amount of points you accumulate. If you open a new credit card that offers cash rewards, and you know you’ll hit the spending minimum with the purchase, it's instant savings. The points can be applied as a statement credit to reduce the cost of the item, Woroch says.

7. Shop for a new card

Nobody is advocating you take on new debt, but if you are in the market for a new credit card, shop for one with generous rewards points in the spending categories you care about. “A lot of our readers had the same credit card for a number of years,” Ewen says. That means they aren’t benefiting from sign-up bonuses, more generous reward points and new perks that weren’t around a few years ago. “If you are smart and financially responsible, it's a good time to up your rewards with a new card,” he notes.

Donna Fuscaldo is a contributing writer and editor focusing on personal finance and health. She has spent over two decades writing and covering news for several national publications including The Wall Street Journal, Forbes, Investopedia and HerMoney.