5 Ways to Earn Cashback Rewards Without Extra Spending
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Cashback rewards are a great way to make using your credit card even more lucrative. Unfortunately, consumers often become so obsessed with rewards that they completely derange their spending habits in order to earn them. The Wall Street Journal analyzed the problem in 2010, concluding that rewards cards do indeed lead to more spending and debt:
The initiation of a 1% cash back program yielded, on average, a $25 reward each month and an increase in spending by $68 a month and in credit-card debt of $115 a month.
The good news: debt is completely unnecessary for getting the most out of your rewards card. With some simple tweaks, you can earn cashback rewards using little more than your own current spending.
Note: There is no amount of rewards that will make up for interest charges that result from leaving a balance on your credit cards. To truly get any benefit from rewards credit cards, you must pay off your balance each month. If you need to leave a balance, find a low interest credit card instead, and don't think about rewards until you've settled your debts.
1. Pick the Appropriate Card for YOUR Spending Habits
We cannot overstate the importance of picking the best rewards card for your own unique lifestyle. Picking the right card isn’t easy, because they aren’t custom designed for individuals. Rather, highly paid marketing teams try to attract as many consumers within a broad group as possible — say, “students” or “business travelers.” Therefore, it’s up to you to decipher the marketing-speak and determine which card provides the most rewards for your spending habits.
If you need help picking the right rewards card, check out my guide: Which Type of Rewards Credit Card is Right for You? Make sure you have the right type of card before continuing on to the next steps.
2. Use That Credit Card for All Routine and Recurring Expenses
The first place most consumers go wrong when it comes to earning rewards is assuming they need to somehow start spending more money. They actually begin looking for excuses to buy things in order to inflate their spending totals.
This is the wrong approach: not just because it’s a sure fire path to debt, but because you spend plenty of money already! If, like most people, you do your day-to-day spending with cash or debit cards, simply making these purchases with your cashback card will boost your spending total without wrecking your finances.
Almost everything the average person buys (from gas to utilities to groceries to rent payments) can be paid using credit cards. Consolidate all spending onto your credit card and just pay it off with cash each month.
3. Make Large Purchases With the Credit Card Instead of Cash or Debit
Looking to buy a new plasma TV? In the market for a new computer? Need to overhaul your wardrobe? All of these purchases are excellent candidates for using your rewards card. In one fell swoop, they will instantly add hundreds or even thousands of dollars to your spending totals, thus increasing your points.
Plus, there are extra benefits to using your credit card for these purchases, including superior fraud protection and extended warranty service.
The key here is to only do this if you have the cash on hand to buy these items and were going to do so anyway. This way, you are simply doing planned spending in a more efficient and profitable manner. Avoid rationalizing major purchases that you don’t want or can’t afford just because “you’ll get the rewards.”
4. Repay Your Outstanding Debts With the Card
Another convenient and responsible way to accrue cashback points is servicing a debt with your rewards card. Many of us have some form of non-credit card debt, including:
- Student loans
- Professional training courses
- Vehicle financing
- Mortgages, HOA fees, or renter's insurance
All of these can generally be paid with a credit card. Look at this the exact same way as your routine, day-to-day spending. You have the cash to pay these loans every month, but it’s not the most efficient way. Instead, by repaying them via credit (and paying off the card with cash) you can partially offset your debts with the rebate you earn.
5. Offer to Pay for Your Friends and Have Them Repay You in Cash
Planning a trip with your friends? Here’s a way to get cash back form the journey: offer to pay their hotel and airfare with your rewards card, then have them reimburse you with cash. There’s no added expense for them nor you, yet you reap the benefits of the entire group’s spending when your next cash back rebate arrives.
This applies for almost anything, not just trips. If ever your friends or even a family member is about to make a large purchase, offer to do it for them. (Unless, of course, they’re as diligent about earning points as you are!)
I want you to notice the consistent thread running through all of these tips. They aren’t just random suggestions. In each case, you are either utilizing your own spending or the planned spending of another person to earn rewards, NOT modifying your existing spending in any dramatic way.
Keep that principle in mind and you will earn more rewards with less risk than the vast majority of consumers!
What are your best tips for earning rewards without extra spending?
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any bank, card issuer, airline or hotel chain.