The Single Best Strategy for Maxing Out Your Credit Card Rewards

Rewards are one of the best credit card perks and a personal favorite of mine. If you have a good credit score, you can get lots of value from rewards credit cards, whether you prefer earning cash back or travel points.

Since I started using rewards cards, I've always wanted to find ways to earn as many points as possible. There are quite a few methods out there. For example, you could shop online through your card issuer's shopping portal to earn bonus points. Or you could add your spouse as an authorized user, so you'll earn points on their spending.

But to be entirely honest, there's one strategy that puts everything else to shame: Opening new rewards cards to earn welcome offers. I've earned well over 1 million points this way, and it's not a hard strategy to follow.

Why there's no better way to earn rewards

Welcome offers are an incentive credit card companies use to bring in new cardholders. They're fairly common among cash back and travel credit cards. If you open a card and meet the terms of the welcome offer, you earn a bonus. Most of the time, the only requirement is spending a certain amount on your new card.

For example, you could find a travel card that offers 75,000 bonus points when you spend $4,000 in the first three months. Or cash back cards that offer a $200 bonus for spending $500 in the first three months.

These give you a much faster way to earn rewards, and one that requires far less spending. Let's say you have a travel card that earns 2 points per $1 on purchases. At that rate, you'd need to spend $37,500 to earn 75,000 points. Many people don't spend that much on their credit cards in an entire year.

With a welcome offer, you could earn that many points with $4,000 of spending, not $37,500. And since you're spending that money within the first three months, you can take advantage of these bonus opportunities multiple times per year.

How to use welcome offers to max out your rewards

Here's the process I use to earn rewards with welcome offers:

1. Decide which type of rewards card you want. Cash back is the most popular type of credit card, but travel rewards cards are useful if you travel often.
2. Check out the highest welcome offers. Remember that the welcome offer isn't the only important feature. Compare all the features of the cards you like to decide which is right for you.
3. Open the card you want and spend enough to earn the welcome offer. Make sure you'll have no problem meeting the spend requirement. If a card requires you to spend $4,000 in the first three months, only apply if you're sure you'll spend at least that much.
4. When you're ready, start looking for cards again. You could do this right after you earn a welcome offer or give it some time. It all depends on how soon you want to get a new credit card.

It's a straightforward strategy, but there are risks involved. If you're going to try it, there are a few things to keep in mind.

Having more credit cards can be a chore

Every time you open a new credit card, it makes your finances a bit more complicated. It's another payment to remember. If you have cards with annual fees, you need to make sure you're getting your money's worth from each of those cards. Only follow this strategy if you're sure you can handle multiple credit cards.

You need to stay on top of your spending

Rewards credit cards and welcome offers incentivize you to spend money. You don't come out ahead if you spend more than you normally would, and you definitely don't come out ahead if you get into credit card debt.

Don't let credit card rewards change your spending habits. Use them for expenses you'd be paying regardless, and don't spend more just to earn rewards. Most importantly, always pay your credit card bill in full so your card issuer doesn't charge you interest.

It eventually becomes harder to get approved for new credit cards

If you open credit cards often, you may stop getting approved as easily as before. Credit card companies look at how many cards you've opened recently when you apply. Some will deny your application if you have too many recent accounts for their liking.

The fast track to more credit card rewards

It's always wise to proceed with caution when it comes to credit cards. I wouldn't advise opening a ton of new cards all at once or taking on more cards than you can handle.

That being said, welcome offers are the best way I've found to earn rewards. So if you're hoping to earn more, try checking out these offers every three to six months and applying if one of them catches your eye.