How To Hack Credit Card Rewards Without Blowing Up Your Budget, According to a CFP
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Listening to your friend describe their latest vacation, one detail stands out: They used airline miles and hotel points to defray the cost — all thanks to their credit card rewards. This approach sounds appealing. After all, you’re already using your credit card regularly — you might as well be rewarded for it.
As you explore different rewards programs, you’re excited to find options like cash back, gift cards or select merchandise among the options.
Now you’re on the hunt for the right rewards card and eager to start earning points, miles and cash back. Barbara Ginty, a certified financial planner and host of the “Future Rich” podcast, understands your excitement. But she also knows how easy it is to overspend while chasing those points — leaving you stuck in credit card debt instead of enjoying the perks.
Using rewards to your advantage while still spending wisely can be a balancing act. Fortunately, Ginty shared her insights on how to achieve that balance as part of the GOBankingRates Top 100 Money Experts series.
Create a Budget
Ginty’s first piece of advice is classic personal finance wisdom: Set a budget. Without one, it’s easier to splurge just to hit rewards milestones. Budgeting ensures you’re spending within your means and earning rewards on purchases you already planned — not swiping your card just for the sake of points.
You should also have a strategy in mind for the rewards you want. That might involve reviewing bank statements to see where you spend the most — groceries, gas, dining out or travel — and choosing cards that offer high rewards in those categories.
Above all, Ginty says, make sure the rewards outweigh any annual fee. And no matter what, pay off your balance in full every month.
Be Honest With Yourself
“To thine own self be true” isn’t just a line from “Hamlet” — it’s also smart advice for avoiding credit card debt. As Ginty puts it, if you know you tend to overspend or have struggled with credit card debt in the past, aggressively chasing rewards may not be a good fit.
“This is not the strategy for you, and that is okay,” she said. “If you can be disciplined about your spending, then utilizing a credit card that will give you rewards for your spending is a great way to maximize where and what you are putting on a credit card to help get cash back or fund a vacation.”
Avoid Common Mistakes
Even with a budget, Ginty warns that common mistakes can turn your efforts to earn rewards into a debt trap.
1. Not Understanding the Point System
Reward structures can be confusing. Some cards offer cash back, while others give points or miles — and each has different rules for redemption. If you don’t know how to use your rewards, you could be leaving money on the table.
Promotional bonuses may sound appealing, but they often come with conditions — like points expiring if you don’t spend a certain amount in a set time. The fine print matters.
You’ll get the most value if you understand how a card’s rewards system works, how to redeem rewards, and what bonuses are available.
2. Not Factoring in the Annual Fee
One of the most important considerations, Ginty says, is whether the card’s rewards outweigh the annual fee.
For example, a card with a $95 annual fee might seem pricey — until you realize you’re earning $300 a year in travel points or saving on checked bags.
3. Choosing Rewards That Don’t Match Your Spending
Ginty also advises choosing a card that aligns with your actual spending.
“For example, if it’s triple points on gas and dining, and those are not big items [for you], then you have the wrong card,” she said.
Stay Disciplined
Discipline is key to maximizing your credit card rewards without going into debt. In today’s world of “tap and go,” Ginty says, it’s easy to overspend — especially when rewards are on the line. But if you rack up debt, those points aren’t helping you.
“The points or cash back are only valuable if you pay off your card in full each month and this value is greater than the annual fee,” she said.
The Bottom Line
When it comes to chasing credit card rewards without falling into debt, discipline and smart spending are essential. Set a budget and stick to it. Make sure your rewards card matches your natural spending habits. And above all, pay off your balance in full every month.
Do all that, and you could be on your way to some well-earned rewards.
This article is part of GOBankingRates’ Top 100 Money Experts series, where we spotlight expert answers to the biggest financial questions Americans are asking. Have a question of your own? Share it on our hub — and you’ll be entered for a chance to win $500.
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