How I use credit card points to save cash or "credit card hack"

My wallet is full!

We like eating out, going to movies, traveling, and having a nice house. All of the things that cost so much money! A few years ago, I started “credit card hacking” to earn some side money for the things we’d otherwise using our money for, this is my approach!

If you have trouble controlling your spending or you are in credit card debit, these suggestions are not for you.

I have a two prong approach for using credit card points to generate extra cash:

• Taking advantage of signup bonuses
• Maximizing every day cash back

First, I chase the occasional sign up bonus. Do you know that credit cards will give you 100s of dollars for signing up to a new account? How crazy is that?

When you sign up for a new account, they will offer you a sign up bonus which can be worth $500 or more after having your account for at least 3 months and meeting a minimum spend, usually at least $3,000 during those 3 months. A few times a year, I will sign up for a new credit card to take advantage of a sign up bonus. I look at three factors when evaluating what card I should sign up for:

1. How big is the bonus? I normally want several 100 in value from the bonus, finding offers with $500 value is not uncommon. A lot of companies will offer $100-200 but I usually skip these and only go for the big ones.
2. How high is the spending threshold? The "normal" amount is 3,000 in 3 months and I know I can get that with my normal spending without a lot of difficulty but sometimes it can be as much as 5,000 in 3 months which is trickier for me. If the spending threshold is high and I don't have any larges expenses coming up, I'll think twice about it.
3. Is there an annual fee? And if there is, is it waived the first year? A lot of cards will waive the fee the first year, if the fee is waived, I just make sure to cancel the card before the fee is applied in year 2. If the fee isn't waived the first year I will weigh this cost against the value of the bonus but usually I don't like  paying a fee, even for a big bonus because there is always the risk I don't get the offer for some reason or it ends up redeeming for less value than I thought it would.

First, I’m not too serious about this approach, I mostly use it to get travel paid for when we go on vacation. There are people who credit card hack constantly and chase every possible bonus. Any points I have leftover after vacation use, I will usually get gift cards for Amazon, Target or T.J. Maxx – someplace where I can buy almost anything I happen to need. To me, an Amazon gift card is basically as good as cash. Or if I need clothes I might get a Banana Republic gift card or Home Depot to pick up some house supplies. But Groupon is one of my favorite redemption options because I can buy almost anything from them - a comforter set, a local cleaning service for a treat or local restaurant for date night!

When I redeem my points, I pay attention to what the redemption rate is and I want to get at least 1 cent per point. For some gift cards, they require a lot more points for the same value cards than others, so I avoid these and look for ones that offer more value. This seems to be especially prevalent with American Express redemptions. I also find that the redemption for hotels is bad so I try to use my points for flights or will get gift cards for other things I would be buying, which frees up money for a trip.

I don’t chase too many sign up bonuses because you have to keep track of details for every one (sign up date, minimum spend needed, card cancellation date) and instead just do the few best ones each year. If I see a really good offer or if I know I have a lot of expenses coming up, I will plan ahead and use these to meet the spending for 1 or 2 card bonuses.

To find the best bonuses I look at thepointsguy.com when I'm thinking about getting a new card and see what the top offers are but there are a bunch of websites which will not only show you the best offers but how to redeem for the most money. Flyertalk is also helpful for getting and redeeming your airline miles.

My second strategy is to make sure I to get the most of out of my every day spending. I put every single thing possible on a credit card. I never pay cash and I never use my debit card unless I have to. I would put my mortgage on my credit card if I could. I also pay off every card, every month. If you are carrying a balance and paying interest, then the points you are getting in exchange aren’t worth it and you are spending too much.

If I’m chasing a signup bonus, I put everything I buy on that card until I hit it but otherwise I have a few go-to cards that I use for my daily spending. First, is my Citi Double Cash card. It gets 2% cash back on everything so it’s my default. I also use the Chase Amazon card for restaurant and Amazon purchases because it gets me more than 2% back in those categories. Lastly, I use the Chase Freedom card for anything that is in the rotating 5% cash back category, but this is another thing I have to keep track of, so lots of times I just use the Citi double cash. My fiance calls this "credit card roulette" because I will be at the cashier trying to remember which card I should use! I have on occasion kept a cheat sheet in my wallet.

I generally get a few hundred dollars in cash back every few months, usually in the form of gift cards or a flight somewhere. I don’t pay anything in fees and buy things that I was going to buy anyway.

As of May this year I have gotten the following for free with points:

• $100 Home depot gift cards
• $125 Groupon gift cards (3 restaurant vouchers, comforter set, sheet set and more)
• $25 Red Lobster gift cards
• $50 Maggianos gift cards
• $50 Amazon gift cards
• $50 T.J. Maxx/Marshalls/HomeGoods gift cards
• $50 JC Penny gift cards
• $25 Banana Republic gift cards
• $100 off flight on Southwest
• 6 movie tickets (~$90)

My fiance and I have gotten a crazy amount of points lately because we were paying the deposits and such for our wedding and I set it up so we could use that spending to hit 2-3 sign up bonuses. This is higher that we would normally spend and more bonuses than we'd normally chase but the higher spending made them easy to hit. Plus it's really nice to get something back after spending a small fortune on our wedding!

If you are in a couple, you can do a signup in each of your names, so we get more points because we both will do it when it's a good offer. We still have more points that we can redeem throughout the year and some airline miles we got. We plan to use some to pay for part of our honeymoon.

Are you a credit card hacker? I would love to hear your tips! What's the best thing you've gotten for free?