Credit Card Tips: How to combine credit cards to earn maximum cash rebates?
By Nick Lian |
Before we look at how to best combine cash rebate credit cards to maximize the
cash rebates you can earn, it is very important to understand the different
types of cash rebate credit cards available and also how the type of purchases
you make is defined and segmented in this market.
Types of Cash
Rebate Credit Cards
The first type of cash back credit card is
what we call the "basic no-frills" cash rebate credit card. These pay the
standard 1% cash rebate on your spending.
The second type is what we
call the "everyday purchase" cash rebate credit card. They pay more than 1%
rebate on "everyday purchases", which in most cases is defined as purchases made
at standalone supermarkets, drugstores and gas stations (Discount outlets are
excluded). They will pay 1% rebate on "other purchases".
Then there are
"tiered rebate" cash back credit cards. These cards pay more than 1% on all
purchases after your annual spending exceeds a certain amount. Some credit cards
require that you carry a balance to earn "maximum rebates". Spending below the
threshold level will earn less than 1% rebates. Some tiered rebate credit cards
also pay different rebates for "everyday purchases" and "other
purchases".
Understanding "Everyday Purchases" and "Other
Purchases"
The key to maximizing the rebates you can earn from
cash back credit cards is to realize that your spending can be split into
"everyday purchases" and "other purchases". Just to recap, "everyday purchases"
in most cases is defined as purchases at standalone supermarkets, gas stations
and drugstores (discount stores are excluded). If you have just a basic,
no-frills cash rebate credit card, all you can earn is 1% rebate. You can
improve this by getting a "everyday purchase" cash rebate credit card and earn
more than 1% on your "everyday purchases".
Many people do not like
tiered rebate cash back credit cards because of its complicated tiered rebate
formula. You have to spend above a certain amount to earn the maximum rebates.
In some cases, you have to carry a balance to earn maximum rebates. However,
tiered rebate credit cards have something that neither a "basic no-frills" or
"everyday purchase" cash back credit card has. It allows you to earn more than
1% rebate on "other purchases".
Combine "everyday purchase" and
"tiered" cash rebate credit cards
Hence, the best strategy to
earn the most rebates is to combine an "everyday purchase" cash rebate credit
card and a "tiered rebate" credit card. The strategy would be to charge your
"everyday purchases" to the "everyday purchase" cash back credit card (earn more
than 1% rebate) and charge the rest of your "other purchases" to the tiered
rebate card. Once you exceed the annual spending threshold on the tiered rebate
card, you will earn more than 1% rebate on your "other purchases". This
combination allows you to maximize your rebates for both your "everyday
purchases" and "other purchases".
This strategy requires that you
charge quite a bit to your credit cards. It will not work for those who spend
only up
to around $10,000 to $15,000 a year because with most tiered rebate
credit cards, you probably need to spend above $6,000 to earn maximum rebates.
Any annual spending below that amount will only earn you less than 1%. Hence,
you need to charge about $15,000 to your tiered rebate card to earn more than 1%
rebate on your total spending. You also have to be diligent in using your cards
at the right places and monitoring your rebates.
You can read more about
cash rebate credit cards and strategies and our recommended cash back credit
cards at our cash rebate credit card, credit card strategy or Editor's Choice of
Best Credit Cards page.
About the
Author
Nick Lian
Owner of Credit
Card Reviews and Tips, a credit card site which writes independent and unbiased
reviews and provides tips and strategies to help those looking for a credit
card. http://www.compare-apply-credit-card-online.com/
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