I’m on record saying that the fastest way to earn miles and points is through lucrative sign up bonuses. That doesn’t mean you shouldn’t be concentrating on maximizing your earning rate at other times. In this post I’ll detail some of the ways I ensure that I earn the most points possible whenever I’m purchasing something.
What is a bonus category?
When I say bonus category, I basically mean when a credit card will give you more than 1 point per dollar spent for shopping at various merchants. For example, the Chase Sapphire Preferred card earns 2X Ultimate Rewards points whenever you use it at restaurants. 2X is nice, but what really racks up points through everyday spending are 5X bonus categories. The Chase Freedom is a great example of this – every quarter of the year you can earn 5X points at certain merchants. For example, you can currently earn 5 points per dollar that you spend at Amazon and various department stores with the Chase Freedom Card.
How can I maximize points earned by buying gift cards?
Simple. With a little bit of organization (and if you have the means), you can simply buy gift cards to maximize the points earned. I’ll just use an example.
As I stated above, you can get 5 points per dollar at Amazon until 12/31 if you use your Chase Freedom. If you generally spend $1500/year at Amazon, you can just buy $1500 worth of gift cards and maximize that category (you don’t get 5X after you pass $1500).
Another great example is the Chase Ink Card, which offers 5X points for purchases at office supply stores. I regularly buy Amazon gift cards there and apply them to my account.
Aren’t gift cards generally ineligible for rewards earnings?
The short answer is no. All credit cards are different and in some cards’ Terms and Conditions it seems like you can’t earn points on gift cards. However, when you make a purchase at Staples, the credit card company has no idea what you spent $500 on. A lot of people will buy other small things along with the gift cards to be safe, so you can do that, but the reality is, unless the credit card company decides to call, they can’t really know what you bought (and I’m not even sure the store is legally required to tell them).
What are some things I should watch out for?
I do have some caveats to using this strategy to earn extra points
1) Don’t get greedy. I mean this in two ways. First, you COULD raise red flags with the credit card company if you keep buying gift cards in the same amounts, so vary your spending. But more importantly, I find when I have a lot of “credit” with a given company like Amazon, I’m more liable to spend money, so I generally don’t keep large gift card balances to protect myself from overspending.
2) Don’t do this if you’re not paying off your credit card bill in full every month. That goes without saying. The rewards you are earning will be obliterated by any interest you’d owe.
3) Make sure you know the gift cards can be used for what you want to buy before you buy them. I bought $300 worth of gift cards for the Google Play store to buy a new phone only to find out that gift card credit can’t be used to buy devices on the Play store. It was quite a fiasco. Thankfully, Google made a one time exception and sent me a refund check, but they didn’t have to do that and I was almost stuck with $300 of credit in a store where I spend about $5 per year.
4) Make sure to activate your Chase Freedom bonuses quarterly! If you don’t activate, you will not gain any bonus points! You can activate at any point within the quarter up until a deadline and they’ll post all the points retroactively.
5) Make sure you have a way to keep track of all the bonuses – once you have a bunch of cards it can get a bit dizzying. Spreadsheets are your best friend.
Many of you probably do this already, but if not, hopefully this helps give you some ideas about how to maximize your earnings. Just remember not to get too greedy – the reason companies sell gift cards is because there is always a percentage of people who don’t use them. Make sure you’re not that person and go get those points!