How to Maximize Your Credit Card Reward Points

Today we have a guest post from the Car Negotiation Coach, who takes a break from discussing car negotiation strategies to talk about how to maximize your credit card reward points.

You can earn rewards points for just about anything these days. Of course you must be careful to avoid credit card tricks that the issuing companies use to keep you from using those points. And most people don’t pay much attention to their accounts until they try to redeem awards.

The average person can accumulate points valued from a couple hundred to a couple thousand dollars per year (tax-free). But unnoticed expiration dates, balances scattered across multiple programs and blackout dates make it easy for those points to lose value.

That’s why it’s important to pay close attention and take an active approach to managing your rewards accounts.

Here are some tips to maximize reward point value:

• Try to build balances in fewer programs. This means fly one or two airlines, stay at the same hotel chain, frequent the same grocery store and use just one rewards credit card.
• Select and use credit card programs tailored towards your spending habits. If you are a frequent traveler a mileage card might be best. If you never fly but drive all over town then a gas card might fit you better.
• Avoid maintenance fees. Select a card that does not require you to pay annual maintenance fees unless you’re certain the benefit outweighs the cost. There are plenty of no fee cards available.
• Avoid buying electronics. Never use your points to buy electronics. You’ll typically spend many times more than the item is worth in terms of “point value.” Travel rewards or cash-back are almost always a better value.
• Keep track of expiration dates. Many programs will expire your points after a period of inactivity. Letting your points expire is like giving your money away.

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How to Track your Accounts

The key to managing your accounts is to track them in one place and review them on a regular basis. My preference is to track my miles in a simple Excel Spreadsheet.

I find the act of updating account details myself causes me to play closer attention. When I do so, sometimes I notice that it actually makes sense to switch credit cards to those with more generous benefits.

I also like that I can easily retrieve my account numbers and passwords using the spreadsheet. However, if you do include user IDs and passwords, as a safeguard you may want to password protect the Excel document.

Here’s a sample of my tracking system:

If you find this to be too much work, then use one of the free online programs that will track your balances for you, like Points.com, Mileport or Award Wallet. However, you’ll still have to remember all your passwords to book your rewards.

Just like you manage your budget, it pays to keep track of your rewards points. The companies that offer rewards programs are required to treat points as liabilities on their books, but oddly enough, the people who earn the points often fail to treat them as assets.

If you leave your accounts on auto-pilot, you’re missing out on getting full value from this often under-managed asset.

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Do you have any tips for managing rewards or getting the most value from them?

Thanks, Geoff. I have to admit that my wife is the keeper of the reward points…but I’m going to share this with her and maybe she’ll allow me to get a new iPod…oh…I forgot…no electronics!

Looks like I’m out of luck…but you’re not…