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Take a look at your expenses and learn how to manage your credit cards

To the point Discover our tips on how to manage your credit cards and improve your reward point earnings by controlling your spending.

While chatting with a friend recently, she confessed that she was not interested in credit cards rewards programs because she said it was “complicated” to manage.

So I sat down with her for this exercise to show her that it’s possible to get much more than her little 1% back on her credit card without any fees.

Getting 10 to 20% back, regularly, on purchases we have to make anyway? Yes, it is possible, but it takes some management and diligence because the issuers will not give you your rewards ready-made! It’s like any other job, what you get is equivalent to the effort you put in.

So let’s go step by step to manage credit cards well and find my tool to download in the toolbox.

1. Determine your monthly expenses by category

Take a look at your monthly expenses:

  • Housing (rent/mortgage, telecommunications, electricity, insurance, etc.)
  • Food (groceries, restaurants, snacks)
  • Travel (car loan, gas, insurance, public transportation)
  • Health (Pharmacy)
  • Entertainment (movies, books, video games, shows etc)
  • Miscellaneous shopping (clothing, shoes, accessories)
  • Children (daycare, pocket money, diapers, clothes)
  • Debts to be repaid
  • Etc.

2. Determine your annual expenses by category

Take a look at your annual expenses:

  • School taxes
  • Municipal taxes
  • Taxes
  • Instalments
  • Professional contributions
  • Professional fees (accountant, notary, etc)
  • Christmas gifts
  • Travel
  • Etc.

By doing steps 1 and 2, you have also just made your budget! A good way to do this is to pull out your bank and credit cards statements for the past 12 months.

Do you have too many debit card transactions? The goal is to optimize your spending, not to inflate your spending just to get points.

Then, if your financial health is fragile, the budget you just made will allow you to target the expenses to prioritize and where to cut.

Is there a category where you overspend? Did you buy too many shoes last year?

Tip : Use this time to determine how much you can save after these steps.

3. Determine what can be paid by credit card (Visa, Mastercard or American Express)

Now you know that you are used to spending $400 on groceries on a monthly basis. Can this expense be made, in whole or in part, with American Express or only with Visa/Mastercard? Sometimes you have to break down certain expenses when you shop at both Metro and Costco.

You should also look at what is usually paid in cash/transfer/check. Then you have to wonder if it can be paid by credit card somehow; through Plastiq or PaySimply, with fees, to unlock a bonus if you can’t get it otherwise.

When I asked my friend about it, she said she gave her son $20 in allowance and he saved it up to buy video games at Walmart or Amazon. Now she buys him gift cards (at 5x points) with her credit card instead!

This kind of minor adjustment saves us from leaving points on the table!

4. Determine your credit card rewards goals

In the Milesopedia Facebook community, I often see the question ”what is the best credit card to make my purchase worthwhile?”. We need to define the word “worthwile” because the answer varies for each person and we are far from having the same objectives.

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 is not worth much to me compared to Aeroplan points. So I’m not getting my money’s worth with the BMO® AIR MILES® World Elite Mastercard®* if my goal is to pay for my plane ticket to New York.

Other things to consider before making a purchase besides the rewards:

Cash back or points for travel? What is best? There are pros and cons to both.

Cash Back and Rewards Points

Cash back and rewards points (CIBC Aventura, BMO Rewards, NBC Rewards, HSBC Rewards, Scotia Rewards, Membership Rewards, etc.)

  • They are like Tangerine GICs or EQ Bank GICs; they have a fixed value.
  • You can choose to apply them on current expenses or on travel expenses
  • They are flexible because you are not limited by a specific company or chain
  • However, you must keep the credit card with which you have accumulated these points so as not to lose them
  • In some cases, a certain minimum number of points must be earned in order to redeem them

Travel points

Travel points: Aeroplan, AIR MILES Dreams, British Airways Executive Club, Marriott Bonvoy, Best Western Rewards, Hilton Honors, etc.)

  • The value of a point varies from one individual to another.
  • The value depends on how you use them, so they can be worth much more than Reward Points.
  • They don’t expire; just keep the account active with a transaction every 12, 18 or 24 months depending on the program terms.
  • They allow us to save as much on standard travel expenses as they do on low-cost luxury.
  • There are plenty of sweet spots to use this kind of points.
  • Understanding how to optimize a program can be difficult for a beginner.
  • They are less flexible
  • We are sometimes restricted by the availability

When you are just starting out, it is more sensible to keep your focus on one or two types of rewards. 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 trip only with points? Yes, but it’s almost impossible to do it optimally with only one type of points. The more programs you master, the more affordable your trips will be.

American Express Membership Rewards points are reward points, but they have a big advantage over other points because they are 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 back!

5. Plan your credit cards rounds and build your rotation plan accordingly

In the wallet of a point hoarders there are earning cards and bonus cards. On the one hand, the expenses you have identified as monthly should be paid with a card or cards that will give you the maximum return in the long run.

On the other hand, good timing with the big annual expenses will pay off big while using the monthly expenses to help you unlock a bonus.

Travel hacking is a marathon and although it pays to get bonuses here and there, you have to do it in moderation. I advocate a balance between earning mode and bonus mode.

For example, let’s say I have $3,000 in expenses each 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 to get cash back:

Organizing my spending this way allows me to know exactly when to make a round, how much and which credit card(s) to apply for.

Since I have determined what can be paid with which type of card and my budget, I know exactly if I am able to reach a bonus or not.

In my personal situation, I make two “regular rounds” of cards per year (in March and November) because it fits with my expenses.

I also give myself leeway in my credit cards applications to be able to take out a new card, outside of my strategy, when an unexpected expense comes up or when an exceptional offer comes up. So it’s easy for me to always space out my requests by at least 3 months for these “surprise” rounds.

I also adjust my strategy if I have big expenses coming up like a new set of tires for next winter or if I plan to renovate my kitchen.

To each his own. If you are a beginner, I advise you to space out your requests by at least 6 months and not to request too many cards at the same time.

The credit score in all this? It is recommended that multiple applications be made on the same day as this helps to ensure that the cards are accepted. However, each request generates a hit. Depending on your habits, the credit score should recover after a few months since credit cards application is not the only thing that affects the score.

6. Management of credit cards, gift cards, foreign currency and points

It is recommended that you create a credit card tracking chart to remember important dates.

I’m sharing my credit card management file (download it here); you can use it as is, or use it as the basis for 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 is a problem with my bonuses.

A common beginner’s mistake is not being able to unlock a bonus in the required time frame either by oversight or mismanagement:

  • Enter the deadline for reaching the spending threshold,
  • Set an alert on your calendar a few days before the statement date to give you time to make the expense and for it to appear on the statement,
  • Enter the amount of spending required to unlock the bonus,
  • Record the remaining expenses to be incurred,
  • Set up pre-authorized debits for your cards payments.

For cards that give a bonus per statement, don’t forget to schedule 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 part of the amount for unlocking bonuses.

Personally, I don’t like Awardwallet and prefer to put the information in the same document.

And yes, I do it manually, but it allows me to check if everything is fine with each program (for example, if the Aeroplan eStore points have been entered correctly).

It’s a good habit to have to keep your finances and points up to date. We have made a habit of doing this on the first of every month.

I also suggest you download the apps for each of the banks and rewards programs. It will allow you to follow the evolution of each account at your fingertips on your phone!

I also keep an eye on any foreign currency I have left over from a trip. I keep some currencies because I know I’ll be going back to certain places so I don’t lose on the exchange rate.

Finally, with respect to gift cards. I treat them as cash, so I also update them manually every month. I mainly use them for very short term purchases (gas, clothes to buy at Simons, etc) or to help me unlock a bonus. So I don’t have a fortune in gift cards and it doesn’t take long to check.

7. Bonus points!

Although this article is about a credit cards management strategy, you should not forget about online shopping portals when shopping for a double or triple dip!

I also added extensions to my browser to remind me to go through the portals.

Bottom Line

Some people will surely 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 see if the effort is worth it!

Come to discuss that topic in our Facebook Group!
Aline Nguyen
I'm Aline, an experienced traveller, a foodie at heart, an Avgeek, a photography enthusiast and an expert on credit card programs. I use Reward Points to travel on a budget and to save money on everyday life; writing about these topics allows me to share my passion and help you. ~ 7 continents and 75 countries ~

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