The Best Way to Spend Money to Earn Credit Card Rewards

Credit card rewards encourage consumers to make purchases using their credit cards instead of their check cards.
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The average household participating in a rewards program earns $622 annually in rewards, according to, but redeems only two-thirds of the total reward balance. This is mostly because of consumers falling short of predetermined tier levels required to cash in those rewards dollars, not redeeming points before the expiration date and being unaware of point balances. Careful thought should be put into which purchases are made on your card to avoid paying unnecessary interest and increase potential rewards earnings.


Many financial institutions will allow consumers to pay utility bills such as electricity, water and natural gas using their credit cards. This is a smart move in terms of rewards potential because these are recurring expenses that must be paid each month and therefore are already figured into your budget. With that being said, it makes sense that a consumer would rather see some return of this money spent in the form of rewards dollars or points.To maximize rewards, confirm that your rewards credit card offers this option, pay your monthly utility bills by credit and make a payment to your credit card account to cover all of the monthly utility expenses.


Another purchase that is inevitably made on a recurring basis for drivers is gasoline. Review the terms of your rewards program to determine if gasoline purchases qualify for rewards dollars or points. Typically, rewards programs will have limitations such as requiring the consumer to purchase gas from affiliated gas stations or will only offer rewards for gas purchases during predefined periods or if a minimum number of gallons is purchased on your card each month. Once you have confirmed that this is an eligible purchase, keep a record of the amount that is spent each billing cycle on gas purchases so you make the proper payment amount to your credit card.

Household items

If you are planning to make certain household purchases such as furniture, carpet or appliances, consider paying for them with your rewards credit card. These purchases tend to be more expensive than ordinary monthly recurring expenses and are helpful in accumulating additional rewards dollars with programs that calculate your rewards based on a percentage of the dollar amount of purchases.

Online Purchases

Many credit companies partner with retailers to offer rewards for shopping online. These programs, such as Shop Discover offered by Discover Card, offer a higher rewards percentage to encourage account holders to make purchases online from these retailers. A best practice would be to closely review the retailer list provided by your card provider to ensure that you maximize your reward potential by not missing out on earning opportunities.

Pay in Full

Pay off these purchases in full each billing period if at all possible. The downside to most rewards credit cards is they are often associated with higher interest rates than nonrewards cards. Because of this, consumers often find themselves overusing their credit cards to earn rewards points and overlook the fact they are paying more in interest on unpaid balances than they are saving with rewards earnings. The balances must remain relatively low for the benefit of the rewards to outweigh the negative of the interest charges. This can be avoided by keeping track of all purchases made on your credit account and setting aside money for each purchase from your checking or savings.

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