We all love that sweet moment when we get cash back for doing something we’re already going to do–spend money. But are you really getting the most out of your credit card? Let’s take a deeper dive into how you can maximize your cash back with each swipe, tap, or click!
People really underestimate how much cash back you can get if you categorize each purchase. I keep 5 credit cards in my wallet, and I take out specific credit cards for specific purchases. Most people don’t really bother keeping track of all the categories, but if you look at the bigger picture, it ends up saving you a huge amount by the end of the year.
Like everything in finance, your case might totally be different than mine, but what is important here is that you learn from my scenario and use it in your case. FYI, in this article, I won’t be talking about all the benefits that each credit card provides, but only the benefits that I find useful in my case.
In complete honesty I have more than 10 active credit cards under my name, which I highly suggest against. I opened those credit cards within the last 10 years. I was in my early 20s, I didn’t have the best spending habits and I paid more in interest than I would have liked, but I learned many lessons out of it. I don’t use most of those credit cards anymore but I am keeping those active, but Why ? That’s the story for another day.
Now let’s talk about those 5 credit cards that I always keep in my wallet.
How do I categorize my purchases ?
- Food & Beverages
- Flights & Hotels
- Groceries
- Online Shopping
- Home Utilities (AutoPay)
- Gym (AutoPay)
- Streaming services (Autopay)
- Google/Apple services (Autopay)
- Everything else
Chase Sapphire Reserve
- This opinion might divide my readers. I know there are two different groups of people, one who is sworn by Chase Sapphire and the other who can’t stop talking about their Amex Platinum. After hearing so many good things about Amex Platinum I did apply for it, but after using it for a year I wasn’t able to get the most worth out of it, so I decided to cancel it. I really think Chase has done a better job giving the best benefits for the fees they are charging annually, which is $550. Before you lose your mind looking at the annual fee, please let me explain myself why I don’t mind paying this fee at all.
- Break into two sentences for clarity: “Right after I get charged $550 on January 1st, I receive a $300 credit to spend on ANY travel purchases. This could be a hotel or a flight from any website—it doesn’t have to be on Chase’s travel portal On top of that I get a free subscription to Doordash Dashpass, which accounts for $120 and it doesn’t stop there. I also get $25 to spend every month. Yes, you read that right. $5 in restaurant purchases and $20 in non-restaurant purchases(which I recently learned) every month. I don’t often use Lyft/Uber, but this also gives free lyft pink membership, so if you are a big rideshare user it will save you quite a bit on those costs as well. This altogether is already more than $550, and I haven’t even included the great benefit of having a place to rest and have some snacks and drinks while you wait for your flight with Priority Pass Lounges.
- But that is not the reason I got this credit card. The incredible cash back rewards drew me to it. It has an amazing 3% base cash back on all travel and restaurant purchases which if redeemed on Chase’s travel portal will turn into 4.5%.
So, what categories do I use this credit card for ?
- Flights & Hotels :
This card provides a base benefit of 3% cashback on all the travel purchases, but where this card shines is if you purchase any flights or hotel stay on Chase’s travel portal you get 5% cashback which will turn into 7.5% if you redeem it on the same portal. This travel portal is a great place to make any travel related purchases as this basically uses Expedia in the back end.
My monthly spending = $1000 ($75 in rewards)
- Food and Beverages :
Everytime when I am in line to order my morning coffee or have a sit down dinner, I automatically go for this card to pay for it and it gives me 3%(4.5%) with each transaction.
My monthly spending = $600 ($27 in rewards)
American Express Blue Cash Preferred
- I love this Amex Blue Cash Preferred just as much as I dislike the Amex Platinum. power Amex also offers a base version of this Blue Cash with no annual fees, but this one does come with a $95 annual fee. So, why did I decide to get the one with annual fees ?
- Because paying the annual fees of $95, doubles all your cashback, from 3% to 6%, and if you are a disney+ or Hulu user, they give you yearly $84 credit to cover the annual fees, What a steal !
So, what categories do I use this credit card for ?
- Groceries :
I think this card is very underestimated for its unbelievable cashback power. You can get 6% cash back at most of the Grocery stores / Supermarkets. So everytime I am at Trader Joe’s or Safeway my hand reaches for this Amex Blue Cash Preferred. Even Whole foods is qualified for 6% cashback, even Amazon card doesn’t offer that much.
My monthly spending = $500 ($30 in rewards)
- Streaming services :
As much as I hate to admit it, I do have subscriptions to a lot of streaming services like Netflix, Peacock, Spotify, Audible, HBO, ect. But it does make me feel a little better when I get 6% cash back on all those purchases with this card.
My monthly spending = $84 ($5 in rewards)
- Google/Apple services :
This is a lesser known fact unfortunately, but you can use this card to pay for all your app store purchases, like Google drive, Apple cloud, or any app store purchases or subscriptions on either of the App stores while scoring 6% every time.
And if you are running a small business and making purchases for domain services, custom emails, cloud storage, etc., you can pay those with this credit card and get 6% cash back as well.
My monthly spending = $100 ($6 in rewards)
I have autopay enabled on most of these transactions and I can easily forget and keep making 6% cashback on every transaction. The big advantage of keeping these categories separated by credit cards is you can keep track of your budget and easily cancel any services when needed.
Bank Of America Customized Cash Rewards
- This is the first credit card I have ever owned. The reason I kept this card for more than 10 years is because I can customize the category I want to receive 3% cash back on.
- You can pick the category out of many provided ones, but I decided to select Online Shopping.
Online Shopping :
I have selected this category because, this was the only card at the time that was giving 3% on almost any online shopping. I have by default set this credit card for Paypal, Shop Pay, Amazon, etc., so every time I am making an online purchase I don’t have to think twice.
My monthly Spending = $800 ($24 in Rewards)
P.S. I don’t really keep this card in my physical wallet, only digital wallets.
U.S. Bank Cash+ Visa Signature
- Just like the BofA Red card above, US Bank Cash+ card also offers multiple categories to choose from. The only downside is that you have to confirm categories before each quarter starts, but you get to choose 2 categories where you can get 5% cashback. They have a wide set of categories to choose from as well, but to maximize my cashback I decided to activate these.
So, what categories do I use this credit card for ?
- Gym/ Fitness center :
I have signed up for a rather expensive fitness center (Orange theory), so it made sense for me to choose this category. Feel free to check out all the different categories to see which one works the best for you.
My monthly Spending = $160 ($8 in Rewards)
- Home Utilities :
Aren’t there some expenses that you can’t hide from, like your electricity provider (PG&E in my case), Waste management, or water bill ? Well, I sleep better knowing that I am getting 5% off everytime I use this card to pay for all the home utilities.
My Monthly Spending = $640 ($32 in Rewards)
P.S. Again I don’t really have to keep this credit card in my wallet, as most of these transactions are set to autopay.
Robinhood Gold Card
- Now if you read this far, you must be very much interested in maximizing your cashback on each purchase you make. Now if you know little bit about Robinhood, they are known to break the mold in the finance industry in many different ways, starting with providing no fees on investing for everyday people, to providing the highest interest rate for savings in the market. In their latest venture they are ready again to shake the credit card industry by providing 3% CASHBACK ACROSS THE BOARD. I know, it is truly unbelievable ! That is something that has never been done in the credit card industry.
Now why is Robinhood different ? Read Here…
- If you are a person who does not like to keep many credit cards in the wallet or does not like to keep track of all the categories or does not want to pay 5 separate credit card bills every month, this is the card made just for you.
- The only thing required to be eligible for this card is Robinhood Gold membership, which costs $50 a year but if you are a Robinhood customer already, you can get so many benefits out of this membership.
- This card is still very new and only a handful of people have this card in their hand. Only time will tell how this card performs over time and how Robinhood will be able to maintain this astonishing benefit. But I am optimistic !
- I highly recommend joining the waitlist and becoming one of the first people to lock in the benefit.
- Everything Else :
After going through the rest of my cards, if my purchase does not fit in any of the categories listed above I put that on this credit card and still score 3% cashback on it. For example, Home Depot purchases, Clothing, Concerts or even Car/Home Insurance.
My monthly Spending = $500 ($15 in Rewards)
Total Monthly Spending = $4384 ($222 in Rewards) = 5.06% in average Rewards
Maximizing your cashback rewards may seem complicated at first, but with a bit of planning and by categorizing your purchases, you can make a significant difference in your savings over time. Whether you’re a frequent traveler, an avid online shopper, or just paying everyday bills, choosing the right card for each expense allows you to earn more with every transaction. By adopting these simple habits, you’ll be on your way to turning routine spending into valuable rewards, making your credit cards work smarter for you in 2024 and beyond.
