While chatting with a friend recently, she confessed her disinterest in credit card rewards programs. She said it was too “complicated” to manage credit cards. So I sat down with her for this exercise to show her that it’s possible to get a lot more than her little 1% rebate on her credit card with no annual fee.
It’s possible to earn a 10-20% rebate on a regular basis, on purchases that you have to make anyway! But it takes management and diligence, because card issuers won’t give you your rewards so easily! It’s like any other job: the fruits of your labor reflect the effort you’ve put in.
Without further ado, here are my top tips for managing your credit cards and earning more rewards points.
Also, take the opportunity to download my tool to help you choose the right credit card by spending category. It’s available in our toolbox.
Take a look at your monthly expenses and write them down:
Take a look at your annual expenses and write them down:
By doing steps 1 and 2, you’ve also just made your budget! A good way to do this is to pull out your bank and credit card statements for the past 12 months.
Do you have too many debit card transactions? The aim is to optimize your spending, not to inflate it just to earn points.
Then, if your financial health is fragile, the budget you’ve just drawn up will help you target which expenses to prioritize and which to cut. Is there a category where you overspend? Did you buy too many shoes last year?
Tip : Take this opportunity to determine how much you are able to save after these steps. You could use the 50/30/20 rule to help you determine this amount.
You now know that you usually spend (for example) $400 on groceries each month. Can all or part of this expenditure be made with American Express or only with Visa / Mastercard? Sometimes, you just have to figure out what you’re spending when you’re shopping, whether at Métro or Costco.
Also, take a look at what is usually paid by cash, bank transfer and cheque. Then, consider whether these expenses can be paid by credit card in some way; via Plastiq or PaySimply, with fees, to unlock a bonus if you’re caught out, for example.
When I asked my friend about it, she said she used to give her son $20 pocket money and he’d save it to buy video games at Walmart or Amazon. Now, she buys him gift cards (at 5X the points) with her credit card instead!
This kind of minor adjustment saves us from leaving points on the table!
In the Milesopedia Facebook community, I often see the question “what’s the best credit card to make my purchase profitable?” come up. We need to define the word “profitable”, because the answer varies for each person. After all, we all have different situations and goals.
For example, $3,000 in grocery expenses can yield :
If I have no intention of going to Disney, but rather to New York, the $400 from Disney isn’t worth much to me compared to the points Aeroplan. So I’m not getting a return on my BMO AIR MILES World Elite MasterCard purchases if my goal is to pay for my plane ticket to New York.
Other things to consider before making a purchase besides rewards:
Cash back or points for travel? Which is better? There are pros and cons to both.
Here are the advantages and disadvantages of cash back and reward points (CIBC Aventura, BMO Rewards, NBC Rewards, Scene+, American Express Membership Rewards, etc.):
American Express Membership Rewards points are reward points. But they have one big advantage over other points: they’re also transferable. That’s why we often recommend the American Express Cobalt® Card: you can use your points any way you like, even for cash rebates!
Here are the advantages and disadvantages of travel points (Aeroplan, AIR MILES Dreams, British Airways Executive Club, Marriott Bonvoy, Best Western Rewards, Flying Blue, Hilton Honors, RBC Avion, etc.):
When you’re just starting out, it’s wiser not to spread yourself too thin and aim for one or two types of reward. By focusing your efforts in this way, you will also have time to master the program(s) in question before venturing elsewhere.
Mastering a program is the key to getting the most value out of it! You need to know how to get the points, but also how to use them to their full potential.
Is it possible to pay for 100% of a trip with points? Yes, but it’s almost impossible to do it optimally with just one type of points. The more programs you master, the more affordable your trips will be.
In a points hunter’s wallet, there are accumulation cards and bonus cards. On the one hand, the expenses you’ve identified as monthly should be paid for with a card or cards that will give you the maximum return over the long term.
On the other hand, good timing with the big annual expenses will pay off handsomely while using the monthly expenses to help you unlock a bonus.
Travel hacking is a marathon, and while it pays to get bonuses, you have to go for it in moderation. I advocate a balance between earning mode and bonus mode.
For example, if I have $3,000 in expenses every December. So I’m going to plan on getting a card to unlock a bonus, in November of each year.
As for the rotation plan, here’s an example of how to earn cash back:
Organizing my spending this way lets me know exactly when to make a round, how much and which credit card(s) to take.
Since I’ve determined what can be paid for with which type of card and my budget, I know exactly whether or not I’ll be able to reach a bonus.
In my personal situation, I make two “regular rounds” of card purchases a year (in March and November) because it’s in line with my expenses.
I also leave myself some latitude in my credit card applications so that I’m in a position to take out a new card, outside my game plan, when an unexpected expense comes up or an exceptional offer arises. So it’s easy for me to always space out my applications by at least 3 months for these “surprise” rounds.
I also adjust my game plan if I have big expenses coming up, like a new set of tires for next winter, or if I’m planning to renovate my kitchen.
To each his own! If you’re a beginner, I’d advise you to space out your applications by at least 6 months, and not to take on too many cards at the same time. What about the credit score? We recommend that you apply for multiple cards on the same day, as this encourages card acceptance. Each application generates a credit inquiry. However, depending on your habits, the credit score should recover after a few months, since taking out credit cards is not the only factor affecting the score.
I recommend creating a credit card tracking chart to help you remember important dates.
If you prefer, I share my credit card management file in our toolbox. You can use it “as is”, or use it as a basis for creating your own spreadsheet. Simply modify the file to reflect your portfolio.
I also save the terms and conditions of the cards purchased and keep them in the same folder as my Excel spreadsheet. This allows me to have all the details in case there’s a problem with my bonuses.
A common beginner’s mistake is not being able to unlock a bonus within the required timeframe. To avoid this :
For cards giving a bonus per statement, don’t forget to program your alert each month. You already have to look at each of your statements to pay them, it will take you a couple of minutes to simply subtract the amount from it to be up to date in your quest for the bonus. Card fees are never included in the amount required to unlock bonuses.
Personally, I don’t like Awardwallet and prefer to gather information in the same document. Yes, I do it manually, but it allows me to check whether everything looks good with each program (for example, whether the points of theAeroplan eStore are correctly entered).
It’s a good habit to get into to keep your finances and points up to date. We’ve got into the habit of doing it every first of the month.
I also suggest you download the apps for each of the banks and rewards programs. You’ll be able to follow the progress of each account at your fingertips on your phone!
I also keep an eye on the foreign currency I have left after a trip. I keep certain currencies because I know I’ll be returning to certain places. So I don’t lose out on the exchange rate.
Finally, I treat gift cards like cash. So, I manually update my gift card balance every month. I use them mainly for very short-term purchases (gas, clothes to buy at Simons, etc.) or to help me unlock a bonus. So, my gift card balance isn’t a fortune and it doesn’t take long to check.
Although this article is about a credit card management strategy, don’t forget online shopping portals when you’re shopping, for a “double” or “triple dip”. For example:
I’ve also added extensions to my browser to remind me to go through the portals.
Some people are bound to reiterate that managing credit cards is complicated. But, as they say, no pain, no gain ! You have to work for your rewards. It’s up to you to decide whether it’s worth the effort! In my opinion, managing my credit cards is a good habit for keeping my finances up to date.
To manage your credit cards and earn more rewards points, determine your monthly and annual expenses that can be paid by credit card. Then determine your rewards goals and plan your credit card rounds accordingly. Of course, pay off your balances in full each month, before the due date.
To avoid paying interest on your credit card, you must pay the balance in full each month. At the same time, this will help you build a good credit history and demonstrate to lenders that you are a responsible borrower. This will help you maintain a good credit record. Finally, avoid cash advances and check your statements online to make sure everything is in order.
Use your credit card for day-to-day expenses only if you can afford to pay it off at the end of the month. When you receive your statement, either online or by mail, check your transactions for the month. Then, pay your account in full (not the minimum payment), before the end of the grace period, to avoid paying interest. If possible, avoid using more than 30% of your credit limit.
Pay your credit card balance when you receive your statement, either online or by mail. In some cases, paying ahead of schedule, before the statement is issued, can help boost your credit score.
Savings are here:
