Credit Card

You can save money by using credit cards that offer cash back rewards. Simply, paying with credit card on every day’s purchase give you back 1% or more (depending on cards and purchases). The type of reward is not only cash back, but also travel points, and due to increased gas price, gas reward credit cards are getting popular. Each card has a different reward program. Some cards offer 5% cash back on a certain category, and some other cards do the same on a different category. Analyse your spending and find out which credit cards are necessary for you, wielding those credit cards and consistently using a credit card that offers the best reward on each purchase will save you money.

But first, you have to follow one simple rule to use reward credit cards.

Pay off on time and in full

You should never carry a balance. Card issuers want you to pay only a minimum so they can charge interest. The interest accumulates every day, especially, reward credit cards generally have higher interest rate than non-reward credit cards. If you cannot control your spending, you shouldn’t even consider applying for credit cards in the first place. To maximize the rewards, you will need many credit cards. Be organized and have a firm control of your spending.

Here are some types of popular cash back reward credit cards

5% Cash Back on Rotating Categories

Chase freedom, Discover it, and Citi Dividend offers 5% cash back on the purchase of quarterly changing categories. For Chase freedom and Discover it, you can earn 5% cash back up to $1500 on the purchase each quarter ($75 cash back quarterly, $300 annually). Citi Dividend doesn’t have the limit each quarter, but the total cash back through rotating categories is capped $300 a year. The chart below is the detail of categories in 2013. (it will probably be similar in 2014)

5% Cash Back Calendar for 2013
 Card  Q1  Q2  Q3  Q4
 Discover it  Restaurants, movie theaters  Home improvement  Gas  Online shopping
 Chase Freedom  Drugstores, gas, Starbucks  Restaurants, Lowe’s, movie theaters  Gas, theme parks, Kohl’s, select department stores
 Citi Dividend Platinum  Drugstores, fitness clubs, Zappos  Home furnishings, Home Depot  Hilton hotels, car rentals, movies, theme parks  Best Buy, department stores, toy stores

You may not need all categories. But you can take advantage of this program by purchasing gift cards. For example, Chase Freedom, Q2, you earn 5% cash back on the purchase at Lowes. Lowes sells a lot of gift cards. Buying gas-station gift cards at Lowes in Q2 gives you 5% cash back on the purchase of gasoline. In Q4, doing the same at department stores let you save 5% on gas throughout the year! Another point, Discover it, Q4: Online shopping. This includes eBay (Paypal) purchase. Since eBay gift cards are no longer available in store, this is the only way to get 5% discount on eBay purchase. The cash back earned through rotating categories can be combined with the cash back earned through online shopping portal.

Extra Bonus through Online Shopping Portal: Chase Ultimate Rewards Mall / ShopDiscover / Citi Bonus Cash Center

An account holders of Chase, Discover, and Citi credit cards can have access to their own online shopping portals. You will receive extra bonus rewards when you link Online Shopping portal. The process of getting rewards is simple. Log in your credit account and find a page of online shopping portals, browse and click a retailer you are going to shop, and then complete a purchase with the card (may not need to use the same card). There are many retailers that offer more than 5% cash back. And this is not temporary offer but every day! Plus, cash back earned through the portals has no limit!

The rate of bonus is different depending on the portals and retailers. ShopDiscover has fewer retailers than other two, but covers most of major department stores and bonus is relatively higher than other two. Some minor retailers offer incredibly high bonus. You should compare all portals and find out which is the best for you. I personally recommend ShopDiscover because of better cash back bonus, better redeem options and additional seasonal bonus. “Discover it Card Review” explains why I like ShopDiscover the best.

Flat 2%+ Cash Back on every purchase with Citi Double Cash, Fidelity American Express Card or Barclaycard Arrival Plus MasterCard

When you can’t find any ways to earn bonus cash back, simply use the credit cards that offer flat 2% or 2.2% cash back on all purchases. You will earn 2% unlimited cash back with Citi Double Cash or Fidelity AmEx, 2.2% with Barclaycard Arrival Plus MC on every purchase, every day.

These are some popular credit cards today. Each of them has own benefit. Use only benefits of each credit card, plan and try to find every possible way to maximize the reward. You might need a lot of calculations or buy many gift cards in advance. But it will reward you with cash back. For more details of these credit cards, other useful credit cards, new strategies, please read blog archive Credit Card.

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