Got big financial plans for 2024? The best rewards credit cards can help you achieve your goals -- if you use them wisely. But they can also lead you into a cycle of debt that’s incredibly hard to break.
Creating a concrete plan for the year can help you decide when to use your cards and how to redeem rewards to get the maximum value.
We talked to three financial experts to help you develop your strategy now, so you can maximize credit card rewards this year without ending up in credit card debt.
8 best strategies to maximize credit card rewards in 2024
How do you benefit from credit cards without piling onto the $1.08 trillion in credit card debt that was crushing consumers as of the third quarter in 2023? You have to maintain better-than-average credit card habits, which you can do using the following strategies and tips this year.
1. Pay off your credit card statements in full each month
Paying off your credit card balance and avoiding interest charges each month is the best way to maximize your credit card rewards in any year. The average credit card interest rate stayed above 20% throughout 2023, according to Bankrate, and rates are unlikely to drop significantly in 2024.
If you don’t pay off your balance each billing cycle, interest charges will add up fast and turn your “rewards” credit card into an incredibly costly loan, according to financial advisor Jeff Rose of Good Financial Cents.
“Say you owe $1,000 on a card with a 20% APR,” Rose said. “Over a year, that’s about $200 in interest alone, eating away any rewards you’ve earned.”
Paying off your credit card each month is like hitting a financial reset button, Rose said. And it’s an essential habit to get into if you want to benefit from credit card rewards or cardholder benefits.
If you’re coming into 2024 with credit card debt, you’re not alone. You can start the year by choosing a debt payoff strategy that fits your budget and helps get you back on track.
2. Know the credit card rewards rules before you apply
Read the terms and conditions for credit cards before you apply, including their rules for rewards programs.
Among the things you should look for when it comes to maximizing credit card rewards:
- The ability to pool points with your spouse or partner. If you and your partner can pool your points, you could both earn bonuses and contribute to the reward total in one account. For example, Chase Ultimate Rewards lets you move your points to another Chase card that belongs to a member of your household, which can be a huge benefit for families trying to save up rewards for a big trip.
- The ability to combine rewards from multiple cards in one account. Having multiple rewards credit cards from the same issuer could help you maximize your earnings if you can combine the rewards from each card in one account. If you have more than one American Express card that earns points, for example, you can ask that the cards be linked to earn Membership Rewards in one account.
- Caps on rewards you earn. By knowing the earning limits for specific categories as well as all other purchases, you can better plan your rewards strategy and credit card spending.
3. Optimize earning categories
You can make the most of bonus rewards categories by planning all your purchases strategically. Consider these experts’ tips for earning more rewards on everyday purchases in 2024:
- Use credit cards with rotating reward categories. These credit cards let you earn more rewards on purchases within bonus categories that typically change quarterly. It takes a little more prep work since most cards only announce the categories a few weeks in advance, and you usually have to activate a category to earn the rewards. However, “by aligning your planned expenses with these rotating categories, you can strategically earn more rewards,” Rose said.
- Use different cards for different purchases. Having multiple reward cards can also be beneficial if you can manage them responsibly, especially if they offer rewards for your regular spending habits. “For instance, one card might offer high rewards on travel, while another might be better for groceries,” Rose said.
- Consider adding a new reward credit card to the mix. Review your 2023 credit card statements to see where you spent the most and where you earned the most rewards. If those two categories don’t align, it could make sense to apply for a card that’s more rewarding for your regular spending, said rewards expert Ariana Arghandewal of PointChaser. “For example, if dining is a big spending category that your current card only earns one point per dollar for, then you should consider upgrading to a different card,” she said.
4. Match your rewards cards to your 2024 goals
You’ll also want to make sure you’re earning the right type of rewards based on your spending habits and your goals. For example, Arghandewal said a flexible rewards program might make sense if you want to get more value out of the rewards you earn when booking travel this year.
After all, most cash-back credit cards offer rewards that are worth 1 cent per point at most, whereas points earned in flexible programs can be worth 2 cents each or more.
5. Budget for a bonus before you apply
A credit card welcome bonus can be an easy way to earn a little more in 2024, so long as you stick to your budget. While bonus offers vary, many let you earn a few hundred dollars to $1,000 or more after meeting a minimum spending requirement within the first few months of account opening.
Before applying for the card, find out what the timeline and spending requirements are, then calculate how much you’d have to spend each month to earn the reward, said consumer finance expert Andrea Woroch.
“As long as you only use the card for purchases you were planning, that money or points or miles is a nice bonus to take advantage of,” she said.
Keep in mind that bigger sign-up bonuses usually have bigger minimum spending requirements. This may not be a problem if you make a lot of regular purchases on a credit card each month, but you will want to make sure you can reach the threshold without overspending and that you can pay off your balance each month. Otherwise, interest charges could wipe out your welcome bonus.
If you’re considering a rewards credit card that offers a bonus when you spend $4,000 on purchases within three months of account opening, for example, ask yourself if you can safely charge at least $1,334 per month in bills and purchases for three months in a row without overspending or making any drastic moves.
6. Explore redemption options to maximize credit card rewards
Maximizing rewards also means knowing the best way to redeem them. This is especially important if you opt for a travel credit card with flexible redemptions versus a cash-back credit card that typically offers a standard redemption value.
In the American Express Membership Rewards program, for instance, points are worth 1 cent each when redeemed for flights through American Express Travel, but other travel redemptions such as prepaid hotels and car rentals offer .7 cents per point.
However, you can also potentially get a greater value by transferring these points to a range of airline and hotel partners. On the Air France website, for instance, you can find a one-way flight in economy from Chicago (ORD) to Paris (CDG) for 22,000 miles plus $65 in airline taxes and fees. If you consider the cash price for the same flight ($920) and subtract the cost of airline taxes, you’d get a per-point value of just over 3.8 cents.
7. Calculate whether an annual fee is worth the extra rewards
One major reward pitfall to watch out for is paying credit card annual fees that ultimately eat into your rewards, Arghandewal said. It’s important to determine the value of a card’s annual fee for each year, since many cards offer a welcome bonus the first year that may offset the annual fee. You can calculate how much value you’re getting by subtracting the annual value of rewards and benefits from the annual fee.
For example, the Capital One Venture X Rewards Credit Card* charges a $395 annual fee. The card offers customers 10,000 miles worth about $100 on their account anniversary after they renew and a $300 annual travel credit to use in the Capital One Travel portal, plus complimentary membership to Priority Pass and its participating lounges (valued at $469 per year). The total value of these benefits could offset the cost of the annual fee if you’re planning to use these travel services.
8. Take advantage of your card’s perks
Finally, make sure you’re taking advantage of the perks your credit card offers you, which can increase the value of your card beyond the rewards you earn. These perks could come in the form of purchase protection, extended warranties, travel insurance, airline lounge access, or fee credits for Global Entry or TSA PreCheck membership.
Be aware that in recent years, some airlines have pulled back on perks or changed the terms -- reducing airline lounge access, for instance. Restrictions are unlikely to ease in 2024, so be sure to read the fine print.
As an example, the $300 annual travel credit offered through the Capital One Venture X Rewards Credit Card is only good for airfare, hotels or car rentals booked through the Capital One Travel platform.
And to make the most of a fee credit for Global Entry or TSA PreCheck offered as a benefit by some cards, you have to take additional steps to apply for these memberships, including an in-person interview.
The bottom line
To make this the year you maximize your credit card rewards, review your current card agreements and look for ways to earn and redeem the most valuable rewards from each card through responsible spending. Strategize which cards offer the best value for each spending category, and consider applying for a different card if you aren’t earning rewards on the purchases you regularly make.
By following these steps, you could make 2024 your most rewarding year yet.
*All information about the Capital One Venture X Credit Card has been collected independently by CNET and has not been reviewed by the issuer.
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