Credit Card Hacks That Work

While some hacks can be helpful, others can backfire. Dreamstime/TCA

By Erin Bendig From Kiplinger’s Personal Finance

Many of the best rewards credit cards come with excellent perks, yet some savvy consumers have found ways to squeeze even greater value out of them.

These consumers utilize “credit card hacks,” or tips and tricks to earn as many points, miles and rewards as possible. However, while these “hacks” can be helpful, they can also backfire.

Here are some hacks that work—and don’t work.

Hacks to Try

Sign-on bonuses: Strategically applying for cards with large welcome bonuses can help you gain enough points/miles to score heavy discounts on travel expenses, or even free airfare.

Be aware, some card issuers have strict rules to protect themselves from those who would churn through credit cards with high bonus offers. For example, Chase’s “5/24 rule” means that the bank won’t consider any applicant who has been approved for five or more credit cards in the past 24 months.

Rotate spending between top-earning cards: Opening cards that offer a high rewards rate for spending in a wide variety of spending categories can help you maximize cash back, rewards or miles on all your purchases.

However, you‘ll need to be careful before applying for several credit cards. To earn many of the rewards associated with credit cards, you’ll have to meet minimum spending requirements, which can add up over time. Failure to pay these back can result in credit card debt and expensive interest charges.

Plus, having high credit utilization or even missing one payment can damage your credit score. If you’ve worked hard to boost your credit score, you may be disappointed when it tanks after multiple card applications. Additionally, too many credit inquiries in a short period of time are bad for your credit score.

Hacks to Avoid

Spending over Venmo: This hack suggests using your credit card to send multiple payments to family or friends over Venmo. While it is possible to use a credit card on Venmo, you'll get hit with transaction fees that can offset any cashback you might have earned in the first place.

Buying and returning items: If you’re thinking about buying items with your credit card just to earn cashback, only to turn around and return those items, don’t waste your time. While you will earn on the initial purchase, if you decide to return any of your purchases, any cashback, miles or points will also be subtracted from your rewards balance.

Canceling and reopening a card for multiple sign-on bonuses: Taking advantage of credit card sign-up bonuses can help you earn many points in a short amount of time. Some offers are so good you may even be tempted to cancel your card and reapply just so you can earn it again. But card issuers have caught on to this “hack” and have put rules in place against it. For example, Amex has a “once per lifetime” rule, limiting cardholders to one welcome offer per card. With many Chase cards, you can only earn one bonus offer every 24 months, or 48 months with a Sapphire-branded card.

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