As prices on goods and services soar, every bit of value squeezed from credit cards helps.
Perhaps paying an annual fee became less appetizing. Maybe you scaled back expenses in certain categories a credit card once rewarded, or you’re seeking opportunities to save with your credit cards.
When you aren’t focused on debt and are looking to make the most of your cards, consider these seven tips to free up money for other goals.
1. Request a product change
Ask your issuer if you can upgrade or downgrade your credit card when it no longer aligns with your spending habits. Downgrading to a different credit card is ideal to avoid an annual fee, while upgrading can provide more valuable perks or rewards.
For rewards credit cards, ask whether existing points, miles or cash back will be affected before making the switch.
2. Reallocate your credit limit
Some issuers allow you to reallocate a credit limit from one credit card to another within their product portfolio. Reasons why you might explore this option include:
- Avoiding maxing out a frequently used credit card.
- Earning more rewards.
- Preserving credit before an account closure.
- Qualifying for a new credit card with less risk to the issuer.
Cindy Greenstein, a points and miles consultant and creator of the blog The Points Mom, has tapped this option to increase her likelihood of approval for a new card with the same issuer, but she says it doesn’t work with every bank.
“Call a special reallocation line and say to them that you only want the card and the bonus,” the New York resident says. “It usually makes them feel better to know that they don’t have to extend you more credit.”
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3. Seek a retention bonus
When you’re on the fence about keeping a once-valuable credit card, ask the issuer whether it can offer any incentive to help you decide. As a loyal customer with a good track record, you might get a retention bonus that grants rewards in exchange for meeting a minimum spending requirement. Offers may vary depending on the issuer, and there’s no guarantee you’ll get one, but it’s worth trying.
Greenstein and her husband recently accepted two retention offers totaling about 70,000 points on credit cards with high annual fees. She estimates the offers added up to a minimum value of $700.
“You have to figure out if it’s worth it, based on what they offer, for you to keep it,” Greenstein says.
4. Meet bonus requirements with gift cards
When chasing a credit card bonus, don’t overspend to earn it. If your budgeted purchases aren’t enough to meet the bonus spending requirements within the designated time frame, consider using the credit card to buy gift cards you can use later.
You could buy a gift card to a grocery store, a restaurant delivery app or an often-frequented retailer. Just don’t overdo it because some issuers have rules against abuse.
5. Negotiate a lower APR
If your account is in good standing, try negotiating a lower annual percentage rate with your credit card issuer. Your creditworthiness factors into the interest rate, but an issuer may be willing to go lower.
Delia Fernandez, a certified financial planner who owns Fernandez Financial Advisory LLC, a California-based firm, suggests searching for competing offers at a different bank or credit union and presenting them to your credit card issuer to get a lower interest rate.
“You always want to negotiate from a position of strength, if you can,” Fernandez says. “So if you’re paying your bills on time and you’re doing well but every now and then you like to keep a balance on your credit card, it’s worth calling them up and finding out if they negotiate.”
This option may also be ideal if you have plans to finance a large purchase and don’t want to open a credit card with a 0% introductory APR.
6. Take advantage of cardholder discounts
Log in to your credit card account frequently to check your benefits and merchant-specific offers. Some cards offer discounts on delivery service subscriptions, meal kits, streaming services or other options.
Depending on the issuer, you might also have access to additional rewards or discounts by activating offers on your card and using it to make purchases with specific merchants. If the offers align with budgeted purchases, the savings can add up.
7. Maximize rewards
Consider having more than one rewards credit card to maximize your rewards-earning potential. As long as you can keep track of spending on multiple cards to avoid debt, a dynamic duo of rewards credit cards can offer healthy incentives.
For instance, a cash-back credit card that earns 5% back on up to $1,500 in quarterly rotating bonus categories can snag you $75 per quarter if you meet the terms instead of the $30 you’d earn on a 2% flat-rate cash-back card given the same spending and time period. But use them together — the 5% card for those bonus categories and the 2% card for everything else — and you’ll optimize your spending.
AP Photo/Keith Srakocic, File
There’s no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you’re looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.
And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.
Here are eight times you could be using the wrong credit card, and what you can do instead.
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You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.
If you’ve used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that’s a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you’ve reached certain thresholds, while others may not. Contact the issuer to check your options.
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New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card’s sign-up bonus, and use the new credit card enough by the deadline. If you continue to pay with an older credit card that’s already in your wallet, you risk missing out on the bonus if you don’t spend enough on your new card.
A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus’s spending requirements.
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It’s true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.
Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.
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Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you’ll have to do some work to earn that rate. In most cases, you’ll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories. If you’re spending outside of those categories with this card, you’ll likely earn a paltry 1% instead of the juicy 5% you think you’re earning.
Most times, you’ll have to activate the bonus categories before the issuer’s deadline to earn the 5%, even if you’re spending in the right category. Plus, you’ll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.
AP Photo/Jenny Kane, File
According to a 2020 NerdWallet study, 14% of Americans view credit cards as “complicated,” and it’s not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too. Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure.
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Balance transfer cards can be excellent tools for paying off debt. They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you’re using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don’t come with rewards. Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both.
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It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%. Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.
Often you’ll have to keep spending caps in mind, too. Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets.
AP Photo/Matt Rourke
Though they may look and feel virtually the same, a debit card is very different from a credit card. Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won’t get with debit, and it’s often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.