How to Play the Points Game
I used to regard people who take entire vacations “using points” like unicorns; they must have been gifted some supernatural ability to parse credit card legalese and confusing offers in order to reap such fantastic benefits. That, or they’re like crazed conspiracy theorists, obsessing over a massive wall covered with Post-it notes connected with bits of string. (“If I use this credit card to buy groceries, I’ll pay off the car with this one, and then transfer the balance over here to the blue Post-it note account….”) But according to The Points Guy, a respected website devoted to helping people maximize credit card rewards, using credit card rewards can actually be surprisingly simple. Other trusted experts from Nerdwallet and Kiplinger agree, which means you don’t need a magic wand or a pile ofPost-its thumbtacked to the wall to make the most of credit card rewards. Here’s what they had to say:
Shop Welcome Bonuses
With heavy competition among credit card issuers, welcome bonuses are getting increasingly lucrative in order to lure new users. According to Nerdwallet, new cardholder bonuses are sky-high, and can be worth anywhere from a few hundred dollars in cash to “an eye-popping $1,000 in travel.” The Points Guy has a regularly-updated page with the best current sign-up offers you can use as a starting point.
Here are some points to consider before you start opening credit cards all willy-nilly. Nerdwallet advocates following a rule of three: Unless the card has especially valuable rewards or benefits, aim for a sign-up bonus value that’s equal to three years or more of the card’s annual fee. So, for example, if you’re looking at a new card that comes with a $95 annual fee, the sign-up bonus should be worth at least $285. For credit cards offering a cash-back bonus, that math is usually pretty straightforward, especially since annual fees are less common among cash-back cards in the first place. 
“Valuing” Miles or Points
To convert points or miles into a cash value can be complicated but not impossible. The monetary values for credit card points and miles vary between card carriers, reward programs, what you redeem them for and how. According to Nerdwallet, the industry standard is usually $0.01 per point, although there are a lot of variations from this amount. (They have yet another helpful page that painstakingly calculates airline miles and hotel points valuations for you, complete with graphs and explanations. Have we sung their praises enough yet?) For example, Capital One miles are worth a flat $0.01 when redeemed for travel, but only $0.005 when redeemed for cash back.
While you’re weighing the value of points and miles, you also need to consider practicality. For example, before applying for a card, make sure the airline with the credit card welcome bonus actually services your local airport. Otherwise, that money you saved on airplane tickets will be spent getting to an airport hours away.
Don’t get disheartened. Trying to make sense of all these caveats and exceptions can be dizzying, but you really only need to suffer these calculations when considering a new card. Once you’ve ascertained whether the card you want will fit into your spending strategies and goals, you’ll just need to understand how that particular card works.
Strategic Spending
To really make the most of your credit card rewards, you need to find out which cards are best to use for specific spending situations. For example, you might get 6% cash back on groceries with one card, and 2% cash back with another. In that case, you’ll want to opt for the former when you shop for food. Kiplinger recommends making a quick reference guide that lists which cards to use for different purposes, sized to fit in your wallet or written with the Notes app on your phone. You could even write details directly on your card with a permanent marker, or wrap the card in a Post-it note that specifies where to use it. (I knew Post-it notes would be involved!)
Sometimes, all it takes to really rack up points is a little creativity. The Points Guy advises that when dining with friends, offer to pick up the tab and have them pay you back with cash or a service like PayPal or Venmo. Or, if you travel for work, offer to cover the travel expenses and get reimbursed instead of letting them foot the bill. (It might take a while to get the money back, but think of the points you could accrue!)
In general, you’ll get the most value if you redeem your rewards in a way that aligns with your card’s primary purpose (i.e., if you have a travel card, it’s best to redeem points or miles for travel-related perks). Likewise, co-branded cards, like the Delta SkyMiles Gold American Express card or the Amazon Visa and Prime Visa cards, usually offer the best rates when you use rewards to make purchases from the corresponding brand. Just try to shop accordingly.
Leverage Shopping Portals
If you prefer shopping online, it’s worth finding out if your rewards credit card has a shopping portal or “bonus mall.” These portals allow you to “stack” savings or points on top of your card’s normal rewards rate when you make purchases through their sites.
An online shopping portal is a page offered by your card’s issuer (or through airline loyalty programs like AAdvantage) that features links to several popular retailers. According to Nerdwallet, when you click these links from inside the portal and make a purchase — as opposed to visiting the retailer’s site directly first — you earn extra points or cash back at whatever rate the portal is advertising. These bonus rewards are in addition to the rewards you would earn just by using your credit card for a purchase normally.
Using a “bonus mall” for the first time can feel sketchy, especially because it usually requires you to sign in with your online card account login information. However, these sites are legitimate and can offer some serious bonus points from your rewards card. 
Ask For Retention Offers
Many credit card issuers are willing to offer generous retention bonuses to dissuade you from closing your account, according to The Points Guy. Simply call your credit card company and say that you’re thinking about canceling your card, but before doing so, you’d like to know if there are any retention offers available. You may be offered a statement credit, bonus points, or an annual fee reduction or waiver.
Before you accept any offers, though, make sure you hear the terms; some offers have minimum spending requirements, and you’ll likely be obligated to keep the card open for another year.
Things to Beware
- Closing old cards and applying for new ones affects your credit score and credit limits.
- Many credit card sign-up bonuses come with strings attached. Make sure the minimum spending requirement fits into your typical spending patterns, or you have a big purchase on the horizon that would help you meet those requirements.
- If you have credit card debt, don’t play the rewards game. To truly reap the benefits, you need to pay off the balance in full each month: 20% interest will quickly negate 5% cash back.
Top image by Visual Content, via Canva.com.
