With taxes due and the second quarter upon us, April provides plenty of opportunities to save money by optimizing your credit card usage.
Every month, the Nerds round up a new set of credit card tips to help you maximize rewards and minimize costs. Here are our tips for April 2016.
Activate your rotating-rewards category
Getting the most out of your 5% rotating-rewards credit card means activating its quarterly bonus category; now’s the time to activate for Q2.
For the second quarter of 2016, April through June, some cards are offering bonus rewards on restaurants and movies as well as grocery stores and wholesale clubs.
If you’re not familiar with rotating-rewards credit cards, the concept is pretty simple. This type of card gives you 1% cash back on most purchases, but 5% back on one or two bonus categories that change every quarter. However, you have to opt in to the category, or “activate” it, to get the bonus. There’s a limit on how much cash back cardholders can earn on the bonus categories (usually $1,500 in spending, or $75 per quarter). Cards typically offer 1% back on spending above that limit.
If you don’t activate, you’re missing out on extra cash back. So go online and activate already.
Save money, earn more rewards with your year-end credit card statement
If saving money moving forward is one of your goals, your year-end credit card statement can help you cut costs and earn more rewards.
Most credit-card issuers provide customers with a report that categorizes all of their expenses on that card in the previous year — how much they spent on restaurants, groceries, gas and so on. These statements typically go out in time for people to refer to them when completing their tax returns.
Knowing where your money went makes it easier to reduce unnecessary spending while revealing areas where you could be earning more rewards by using the right card. For example, if your year-end summary shows that you’re spending a lot on gas, you might want to shift those expenses to a credit card that earns a high rewards percentage at gas stations. The same goes for categories such as restaurants, grocery stores and travel.
It can be easy to lose track of where you’re spending money day to day, but taking a peek at your year-end card statements may help make sense of a year’s worth of use.
Figure out if you’re getting the most out of your points
If you have a credit card that earns points or miles (as opposed to straight cash back) it’s best to know how to get the most when it actually comes time to redeem your points. Remember, not all points are worth the same amount when converted to cash.
NerdWallet has points valuations for most of the popular rewards programs around. Some of the best redemptions for each are outlined below:
- Chase Ultimate Rewards
- Average point value: 1 cent per point
- Best redemption: 1.25 cents per point when redeemed for travel through the Chase Ultimate Rewards
- Worst redemption: 1 cent per point (still relatively good) for statement credit, Amazon purchases and gift cards
- Starwood Preferred Guest Starpoints
- Average point value: about 2.3 cents per point
- Best redemptions: 2.7 cents per point for domestic weekday stays, 2.4 cents for domestic weekend stays
- Worst redemption: 0.89 to 1.07 cents per point for gift cards
- American Express Membership Rewards points
- Average point value: about 0.75 cents per point
- Best redemptions: 1 cent per point on gift cards, charity, Uber and if you book travel through American Express
- Worst redemptions: 0.5 cents per point on merchandise through American Express’ site, 0.6 cents per point for statement credit, and 0.7 cents per point through Amazon.
- Capital One miles
- Average point value: about 0.75 cents per point
- Best redemptions: 1 cent per point using Purchase Eraser for travel purchases, booking travel through Capital One or redeeming for gift cards
- Worst redemption: 0.5 cents per point for cash back
- Citi ThankYou points
- Point value: Maximum of 1 cent per point
- Best redemptions: 1 cent per point for gift cards, charitable contributions, mortgage and student loan payments, among others
- Worst redemptions: less than 1 cent per point for various merchandise, 0.5 cents per point for statement credits and cash
(Click on the links above for the full points valuations.)
Kevin Cash is a staff writer at NerdWallet, a personal finance website. Email: kcash@nerdwallet.com. Twitter: @kevin_cash.
Image via iStock.
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