Have you ever wondered how people rack up so many credit card points to use on airplane tickets and hotels? Do you use your debit card for all purchases? If you are, you’re missing out. These high rewards credit cards can replace your debit card and help you rack up points on all your purchases.
High rewards credit cards can help you rack up points
While you were growing up, you may have heard your teachers tell you to stay away from credit cards. Maybe your parents ingrained it in your mind.
While credit cards can create problems when you use them irresponsibly, they can provide great benefits when used correctly.
Basically, if you stick to a budget and run all of your everyday purchases through a high rewards credit card, you can save yourself quite a bit of money.
When you use your debit card at the grocery store, you’re missing out. Along with putting yourself at a much greater risk, you’re missing out on credit card points.
If you want to maximize the money you save, you need to be using a credit card with a rewards program. This will help you grow your credit score. At the end of the month, pay off the credit card in full and you’ll be fine.
If you’re looking to venture into the land of credit card rewards, follow our steps below.
Step #1: Blue Cash Everyday from American Express
If you have any credit card from Capital One, you should consider replacing it with the Blue Cash Everyday from American Express.
Capital One tends to offer cards catered to lower credit scores. Because of that, Capital One’s credit cards tend to have fees for secured cards and perks and benefits may be limited.
Also, people around the web have reported difficulty in getting a credit limit increase from Capital One. Increasing your credit limits is hugely important for increasing your credit score.
On top of that, Capital One’s reviews seem to be subar.
That’s why you should strive to improve your credit score and apply for the Blue Cash Everyday card from American Express.
With Blue Cash Everyday, you receive 3% cash back at U.S. supermarkets. This includes stores like Walmart and Meijer. If you do a lot of shopping at places like that, you should definitely be applying for this card.
Along with cash back on groceries, you receive 2% cash back on gas stations and department stores. For all other purchases, you receive 1%.
If you don’t have any high rewards credit cards, start by applying for the Blue Cash Everyday.
Step #2: Upgrade to Blue Cash Preferred
Once you have a relationship with American Express and see the value of the Blue Cash Everyday, consider upgrading to a Blue Cash Preferred.
The Blue Cash Preferred card by American Express is basically the same as the Blue Cash Everyday. It’s meant for everyday purchases like groceries and gas.
With the Blue Cash Preferred card, you get 6% cash back on all groceries and 3% cash back on all gas. If you have a family, this rewards card is a no brainer. You could easily rack up points at supermarkets by running all grocery store transactions through this card.
Then, when you’re getting gas, use the Blue Cash Preferred card as your method of payment.
At that point, you’ll be taking full advantage of the $95 annual fee.
For reference, you only need to spend $31 per week to break even with the annual fee. To hit the limit of $6,000 per year, you’d need to spend $116 per week at supermarkets.
By keeping an eye on available high rewards credit cards available to you, you can replace and upgrade the cards in your wallet – maximizing your perks and benefits.
Step #3: Apply for Chase Freedom
Once you have a high rewards credit card from American Express, look into the Chase Freedom card.
Essentially, the Chase Freedom card offers different 5% bonuses every three months.
For example, in 2016, January 1 – March 31 offered 5% cash back on gas. April 1 – June 30 was 5% on groceries. July 1 – September 30 was restauarants.
Finally, October 1 – December 31 was 5% cash back on Christmas shopping.
As a bonus, the Chase Freedom card does not have an annual fee.
By using these high rewards credit cards for your everyday purchases, you can save yourself a bunch of money.
Don’t use these credit cards to buy things you can’t afford. Simply put, the cash you’re already spending everyday should be run through a credit card giving you cash back.
Step #4: Consider Discover It
As a Chase Freedom competitor, the Discover It card also offers 5% bonuses every three months.
For example, in 2016, January 1 – March 31 offered 5% cash back on gas (just like Chase Freedom.
However, April 1 – June 30 was different. Discover It offered 5% cash back on restaurants and movies. July 1 – September 30 was home improvement and Amazon.com. Finally, October 1 – December 31 gave you 5% on Amazon.com, department stores, and Sam’s club.
As you might be thinking now, choosing between the Chase Freedom and Discover It cards depends on your shopping habits.
If you do a lot of shopping at Amazon.com, Discover It might be the right choice. On the other hand, if you want to save on Christmas shopping, Chase Freedom might be the best choice.
To sum it up, you should definitely apply for a Chase Freedom or a Discover It card. These credit cards are huge supplements to a Blue Cash Everyday or Blue Cash Preferred card.
Step #5: If you travel, look into Gold and Platinum from American Express
Finally, once you’ve ventured through all of the high rewards credit cards listed above, you enter baller territory.
The Gold and Platinum cards from American express offer plenty of benefits for the frequent traveler.
If you simply want a Gold or Platinum card for everyday purchases, do not apply for these cards. These cards aren’t meant to collect dust in your sock drawer.
The Gold card comes with an annual fee of $195. On the other hand, the Platinum card has a steep annual fee of $450.
This doesn’t mean these cards are a complete waste of money. In the right circumstances, you can easily save $450 or more every year on your travel.
Personally, I wouldn’t try to replace any of your everyday credit cards with a Gold or Platinum card. I’ve thought about applying myself, but if you don’t travel frequently it just doesn’t make sense.
If you do travel, the benefits are vast.
With the Platinum card, you automatically receive Hilton HHonors status, Priority Pass Select membership, and a credit for TSA PreCheck. Using these perks alone, you could surpass $450 in savings.
In comparison, the Gold card allows you to earn three points for every dollar you spend on flights. You can also earn two points at grocery stores (but you should definitely be using your Blue Cash Preferred card instead). As an added bonus, the Gold card gives you a $100 airline credit to cover baggage fees and things like that.
- Using a debit card exclusively can put you at risk of fraud.
- High rewards credit cards can help you rack up points and savings.
- Build a relationship with American Express by trying their Blue Cash Everyday card.
- Apply for a rotating categories card like the Chase Freedom or Discover It.
- If you’re a baller, take a look into the Gold and Platinum cards from American Express.
What about you? How do you use credit cards to save money? Let us know in the comments below.