5 Ways to Maximize Your Credit Card Rewards

Americans can’t pass up a good bargain. That’s why we clip coupons and spend hours in line for Black Friday deals, and buy toilet paper and frozen foods in bulk. Many credit cards feature either cash back or rewards programs to “reward” you for using them with cash back incentives and rebate programs.

Yet when it comes to maxing out on credit card rewards, consumers are far less vigilant and determined. According to a 2011 study from Colloquy and Swift Exchange, the average household enrolled in a rewards program failed to redeem a third of the rewards they earn each year; including credit card rewards. Most don’t even realize they have points on their cards.

[RELATED: Keep Track of Rewards Points]

However, not all cards are created equal, even if they offer a similar type of rewards program. Here are five tips to help you use credit card rewards programs to your greatest advantage and avoid common pitfalls, such as leaving points on the table.

Choose the Right Rewards Credit Card

One of the best reasons to get a credit card is the ability to treat yourself to the perks of its rewards program. Get the most out of your rewards credit card by choosing the right one. First, make sure the credit card and rewards program you choose fits your financial lifestyle. If you travel significantly, a hotel or airline card is a good fit for you, and you can quickly accumulate bonus mileage and usage towards vacations. A Capital One or store card may be great for parents who are small business owners, and is valuable when purchasing supplies or to stock up the home office.

Consider Cash Back Credit Cards
For practical shoppers who like instant gratification and an uncomplicated rewards system, cash-back credit cards are a great option. Cash rewards are as easy and straightforward as rewards can get. Many cash-back cards come with numerous ways to redeem your

rewards, such as checks, in-store cash, statement credits, gift cards or charity donations. Others will automatically deposit your rewards directly into your bank account. Cash-back cards can also involve a little advanced planning. While most cards offer 1% to 2% cash back, there can be restrictions or requirements; such as caps on spending in different categories or more rewards for purchases on dining, gas or groceries.

Know the Rules and Read the Fine Print
Rewards credit cards come in many flavors. Some require meeting a spending threshold before you can earn rewards or cap the amount of rewards you can earn in a certain period. The inconvenience of blackout dates for redeeming travel rewards are a standard joke for many would-be travelers. Know the rules, because ignoring them could mean disappointment and lost opportunities. For example, some cash-back rewards programs have rotating categories that require quarterly registration. Therefore, consumers have to pay keen attention to fully take advantage of their credit card.

Look for Bonus Opportunities
Sometimes you will need to enroll in these quarterly cash-back specials, so be on the lookout for special mailings or online alerts to register. Also keep an eye out for opportunities to double or triple your rewards earnings power. Many issuers offer an increased cash-back return rate every quarter or season in certain categories. For example, some issuers will reward travel purchases more during the winter holidays.

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Online shopping offers almost unbeatable deals and give customers an easy way to maximize their rewards. For example, Discover cardholders who shop through the ShopDiscover portal, which features such retailers as Best Buy, Kohl’s, and the Apple Store, can earn up to 20%  in cash back on their purchases.

Make Smart Credit Choices
Even with all the perks and savings, keep in mind that a rewards credit card is still a credit card. That means sticking to the tried-and-true rule of paying off your entire balance, or as much of it as possible, every month. Use your rewards card wisely. Remember: if you keep a balance, you’re really funding your own rewards program. Most credit card issuers fund rewards programs by charging

higher interest rates on rewards cards. So keeping a revolving balance won’t help you garner the most out of their rewards, plus you’re usually paying a higher interest rate. Whatever you’re earning in points, miles or cash back, you’re likely giving it right back to the issuer in interest.

Don’t pay late and never miss a payment. Missed payments often results in forfeiting the rewards you have earned. Another drawback is long periods of inactivity on your card; you may lose the rewards, or cash back on the credit card itself. Redeem your rewards periodically instead of hoarding them so you’ll get the full value without the risk of losing them. To find out how much bang you’re getting for your rewards, check out your year-end summary that issuers provide; by dividing the rewards you earned by how much you spent, to see if you’re coming out ahead. If you don’t like the results, consider switching credit cards.

Click here for more tips on best credit cards for rewards.