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Q: I want to maximize my credit card rewards without taking out new cards. How can I do that?
A: Rotating credit cards can have a negative impact on your credit score. So sometimes you need to get creative to come up with ways to maximize your credit card rewards.
Here are some unique strategies to build rewards even faster -- or meet the spending threshold necessary for your sign-up bonus.
Pay for Medical Expenses
Medical expenses can add up quickly. If you have a HSA (health savings account) or FSA (flexible savings account), you probably have a debit card you can use to access your account balance. Another option is using your credit card to pay for medical expenses like prescriptions, co-pays, and doctor appointments, then requesting a reimbursement for the expense from your FSA or HSA.
If you pay for expenses with your credit card, you can reimburse yourself as long as the medical expense was incurred while your FSA or HSA was open. With a HSA, you can even reimburse yourself years later as there is no time limit. With a FSA, the reimbursement must occur in the year the expense was incurred and the money was saved. Make sure you keep good records and only use the FSA or HSA to pay for medical expenses that qualify. In most cases, insurance premiums and non-prescription medications will not be qualified.
Schedule Recurring Bills
As long as you can pay off the balance each month, scheduling all of your bills to go through your credit card can help you wrack up points faster than ever. Bills you can usually set up with your credit card include:
- Homeowner's insurance
- Car insurance
- Medical insurance
- Gym membership
Open a Tech CU Checking Account
Technology Credit Union (or Tech CU) is a California-based credit union that allows you to fund a new checking account with a Discover, Mastercard, or Visa credit card.
After paying $8 to join the Financial Fitness Association, you can fund your new Tech CU account with up to $1,000 via credit card. This trick is an especially good way to meet minimum spending thresholds.
A basic Tech CU checking account has no fees or minimum balances. If you plan to use it as your regular account, you can even earn a $150 bonus. Through July 31, 2006, you can use promo code "MOVEON" and earn $100 for scheduling a recurring direct deposit of at least $500 plus another $50 for paying a bill online.
Sign Up for Dining Programs
Dining programs are an easy way to boost the number of miles or points you earn by getting rewarded for dining at partner restaurants and using your credit card. There are dozens of dining programs, including those affiliated with major domestic airlines like American Airlines plus the Hilton HHonors program, the IHG Rewards program, and more that allow you to essentially double-dip with points or miles.
Along with earning the miles or points you would normally earn with your card, you can also earn 3-5 miles or points in the hotel or airline loyalty program by linking your credit card. You can only link each credit card to a single dining program, but you can link different cards to different programs to earn bonuses. The best way to boost your rewards is linking your favorite credit card with a restaurant bonus -- such as the Chase Sapphire Preferred which earns 2x points at restaurants -- to a dining program.
Many airlines even offer bonus miles when you sign up with a dining program. For example, American recently offered 1,000 bonus AAdvantage miles to new dining program customers.
Here are some popular dining programs to consider:
- American Airlines AAdvantage Dining Program earns up to 5 AAdvantage miles per $1 at popular restaurants.
- Delta SkyMiles dining rewards program.
- Alaska Airlines Mileage Plan Dining program earns up to 5 miles per $1 spent at restaurants and bars.
- Southwest Airlines Rapid Rewards Dining program earns 3 points per $1.
- United Mileage Plus Dining program earns up to 5 United miles per $1.
- Hilton HHonors Dining program earns up to 8 Hilton HHonors points per $1 spent at participating restaurants.
- IHG Priority Club Rewards Dining program earns up to 8 points per $1.
You can also use OpenTable, a website that allows users to make online reservations at thousands of participating restaurants. Every online reservation through the site earns points that can be redeemed for dining certificates. You can double dip for point sor miles by making OpenTable reservations and using a dining rewards program.
Make a Kiva Loan
Kiva.org is a microlender that allows you to lend as little as $25 to small business owners and entrepreneurs in mostly developing countries. Borrowers pay back the loan in installments over a specific number of months. Kiva allows you to lend money to borrowers using your credit card to help someone get a foot up while earning credit card rewards. The loans do not earn interest for you, but they are treated as a purchase by most credit card issuers. Some card issuers process Kiva loans as charitable contributions, in which case you may even get bonus points.
Kiva loans do come with some risk, but default rates are low. You can choose a loan and repayment schedule then pay with your credit card through Paypal, which waives all credit card fees on the loan. It may take anywhere from 6 months to 15 months for your loan to be repaid. When the loan is repaid, it will be deposited into your Paypal account.
Use ChargeSmart Bill Pay
You probably have several expenses every month that you can't pay with a credit card such as a car payment, HOA fees, student loans, or a mortgage. ChargeSmart allows you to send electronic payments and use a credit card for companies that do not accept credit card payments.
You will need to pay a fee of 2.5% to 3% to use this service. Depending on the biller, you will pay a flat rate fee or a blended fee. It's best to only use ChargeSmart when you need to meet a spending threshold to get a sign-up bonus. Sometimes you may find promotions to save on the fees, though. In 2011, Discover paid all ChargeSmart fees for cardholders as part of a promotion.
Note: In the past, buying prepaid American Express Bluebird cards was a great way to meet spending thresholds, but Bluebird cards can no longer be purchased with a credit card as of January 2016.
Pay Taxes and Tuition with Official Payments
You can make payments to local governments, cities, the federal government, and many colleges with a credit card through Official Payments, a third party service provider. Just be aware that there is a fee for payments made through Official Payments, and the service fee will depend on the type of payment you're sending and the organization.
If you pay your federal income taxes, for example, there will a service charge of 2.25% (minimum $2.50) for credit cards. If you pay by debit card, you will be charged a flat fee equal to $2.50 on charges up to $1,000, or a flat $3.95 fee on debit card charges greater than or equal to $1,000.
These fees will likely cancel out any rewards you will earn, but it may be helpful for reaching a minimum spending threshold.
Tips for Success
Be careful when you try to get creative to earn credit card rewards as you may be unknowingly hit with a fee, especially if your credit card issuer processes the transaction as a cash advance.
Here are some tips to keep in mind:
1. Some credit card companies (most notably Citi) treat gift card purchases as cash advances. You should be fine if you buy gift cards from a grocery store, but you will probably be hit with cash advance fees if you buy gift cards directly from American Express, for example.
2. Using third party services to send cash or make bill payments with a credit card will usually come with a fee of 3% or more. This will likely cancel out your rewards.
3. Most credit card issuers limit sign-up bonuses to new customers. Always check the terms before you sign up for a new credit card. For example, American Express used to give you the sign-up bonus if you did not have the card in the last 12 months.
4. Sign-up bonuses are only given to new cardholders, no matter how long it has been since you canceled the card and applied again.
American Express is the most restrictive issuer as they only allow 4 AmEx cards to be open at once. With Chase, you can get a sign-up bonus on a card you've already had as long as it's been 2 years since you received the sign-up bonus. Citi also allows you to earn multiple bonuses on cards after an 18-month waiting period after canceling.
I hope these tips help you max out your credit card rewards. And, if you have any creative ideas I didn't come up with, please share them in the comments.