In today’s world, credit cards are one of the most common ways to pay for everything from your morning coffee to big-ticket items like electronics and travel. But not all credit cards are created equal, and if you want to make the most of your spending, it’s important to choose the right card for each purchase. That’s where cashback credit cards come into play. These cards allow you to earn money back on your purchases, which can quickly add up and make a huge difference in your finances. But what if you could maximize those rewards even further?
The secret is in combining cashback credit cards strategically. By using multiple cards for different types of purchases, you can earn a higher percentage of cashback than you would with just one card. Let’s break it down and explore how you can use cashback credit cards to their full potential.
Understanding Cashback Credit Cards
Before diving into the strategy of combining cards, it’s important to understand what cashback credit cards are and how they work. A cashback credit card rewards you with a percentage of your purchases, typically ranging from 1% to 5% or more, depending on the category of the purchase. Some cards offer flat rates on all purchases, while others offer higher cashback rates in specific categories, like groceries, dining, or gas.
For example, you might have a card that gives you 2% cashback on grocery store purchases, 5% cashback on rotating categories (such as online shopping or dining), and 1% cashback on everything else. By using the right card for the right purchase, you can earn maximum cashback on each transaction.
The Basics of Combining Cashback Credit Cards
Combining credit cards for cashback rewards might sound like a lot of work, but once you understand the strategy, it becomes a straightforward process. The goal is to use a combination of cards that each offer the highest cashback percentage in their respective categories. Here’s how you can get started:
- Identify Categories That Earn the Most Cashback
First, take a look at your spending habits. Are you spending more on groceries, dining out, or gas? Some cards reward specific categories, so identifying where your money is going can help you choose the right cards. For example, a grocery card could give you 5% cashback on food purchases, while a gas card may give you a 3% cashback on fuel purchases. - Use Rotating Category Cards Wisely
Many cashback credit cards offer rotating categories, where you can earn higher cashback percentages during certain times of the year. These categories typically change every quarter, and you may need to activate them to start earning the higher rewards. For instance, a card might offer 5% cashback on grocery store purchases in one quarter, but in the next quarter, it could switch to 5% cashback on home improvement purchases. Be sure to check your card’s rotating categories regularly and activate them to take advantage of the higher cashback rates. - Pick Flat-Rate Cashback Cards for Everyday Purchases
While rotating category cards are great for maximizing cashback in specific areas, flat-rate cards can help you earn cashback on every single purchase. These cards typically offer a lower rate, like 1% to 1.5% cashback, but the beauty of them is their simplicity. They don’t require you to track spending categories or activate rewards. They’re perfect for all your everyday purchases that don’t fall under a specific category. - Don’t Forget About Sign-Up Bonuses
Many cashback cards offer lucrative sign-up bonuses, sometimes as high as $150 to $300 or more after you meet a minimum spending requirement. These bonuses can add a significant boost to your cashback earnings, especially if you use the card for large purchases. Look for cards that offer good bonuses in addition to their ongoing cashback rewards. - Keep an Eye on Fees
When combining multiple credit cards, it’s important to make sure the fees don’t outweigh the cashback you’re earning. Some cards have annual fees, foreign transaction fees, or other charges that can cut into your savings. Ideally, you want to use cards that offer rewards without charging excessive fees. While some high-reward cards may come with a fee, make sure the rewards you earn justify that cost. - Use Online Shopping Portals for Extra Cashback
Some credit cards offer additional cashback when you shop through their online shopping portals. These portals let you shop with your favorite retailers and earn extra cashback on top of what you already earn with the card. For example, a cashback card might offer an extra 1% cashback when you shop at major online retailers through their portal. This can significantly increase your cashback potential on online purchases.
Best Cashback Credit Cards to Combine
Now that you understand the basics of combining cards, let’s take a look at some popular cashback cards that work well together:
- Citi® Double Cash Card
This card offers 1% cashback on all purchases, plus an additional 1% cashback when you pay off your balance. It’s one of the best flat-rate cashback cards available and works great for purchases that don’t fall into specific categories. - Chase Freedom Flex℠
This card offers 5% cashback on rotating categories, 3% cashback on dining, and 1% cashback on all other purchases. It’s an excellent card for earning big rewards in different categories, especially if you’re able to activate and take advantage of the rotating 5% cashback categories. - Blue Cash Preferred® Card from American Express
This card gives you 6% cashback on select U.S. streaming subscriptions, 3% cashback on transit and commuting, and 1% cashback on other purchases. It’s perfect for those who want to earn cashback on everyday purchases, especially if you have recurring subscriptions. - Discover it® Cash Back
Discover’s rotating cashback categories offer 5% cashback on specific purchases each quarter, along with 1% cashback on other purchases. Plus, Discover matches all the cashback you earn during your first year, which can make it a great option for maximizing rewards. - Wells Fargo Active Cash℠ Card
If you’re looking for a flat-rate card with no rotating categories, this one gives you 2% cashback on all purchases. It’s simple, straightforward, and perfect for maximizing cashback without any effort.
How to Maximize Your Savings
To make the most of your cashback credit cards, follow these simple steps:
- Track your spending: Keep a close eye on where you’re spending your money and make sure to use the best card for each purchase.
- Pay off your balance in full: The key to using cashback credit cards effectively is paying off your balance each month to avoid interest charges. If you carry a balance, the interest you pay could outweigh any cashback you earn.
- Reinvest your cashback: Some people choose to reinvest their cashback by putting it into savings or using it to pay down debt. Others use it for everyday expenses like groceries or gas, which can make a real difference in your budget.
Final Thoughts
Combining cashback credit cards can be a game-changer for your finances. By using the right card for each category, you can maximize your cashback earnings and boost your savings over time. While it may take a little effort to track which card to use for each purchase, the rewards are well worth it. So, start strategizing and combining your cards to unlock the full potential of your cashback rewards. The more you plan, the more you’ll earn!