July is a great time to pick up tools on sale — and Discover it® card users can get an extra 5% cash back to boot. Photo: Black & Decker via Facebook
When it comes to maximizing credit card rewards, many people choose to never pay an annual fee. That way, they never have to worry about canceling the card if they stop using it enough, or the impact on their credit if they do.
Two excellent rewards cards that can help you maximize rewards without ever paying an annual fee are the Discover it® and Chase Freedom® cards. Although they’re issued by different banks, they both work in similar ways – neither one charges an annual fee, and they both offer a lucrative rewards program that allows you to rack up cash back on your everyday purchases.
Even better, both cards offer the opportunity to earn five points per $1 spent on certain categories that rotate throughout the year. Here’s how they work:
Discover it®
Highlights:
Rotating 5% Cash-Back Categories:
- April–June 2015: Restaurants and movies
- July–Sept. 2015: Home improvement stores, department stores, and Amazon.com
- Oct.–Dec. 2015: Holiday Shopping & more
Chase Freedom®
Highlights:
Rotating 5% Cash-Back Categories:
- April–June 2015: Restaurants, Bed, Bath & Beyond, H&M, Overstock.com
- July–Sept. 2015: Gas stations and more
- Oct.–Dec. 2015: Amazon.com and more
How to Maximize Rotating Rewards
Obviously, the opportunity is there to rack up some serious rewards throughout the year with either of these cards. With the Discover it®, for example, you could earn 5% cash back on dinner-and-movie “date nights” through the end of June.
Meanwhile, if you had both of these cards, you could enjoy 5% cash back on all of your Amazon.com purchases through the second half of the year (July through September with Discover it® and October through December with Chase Freedom®). And if you drive a lot or have a family road-trip coming up, the Chase Freedom® card’s 5% cash back at gas stations this summer could come in extremely handy.
However, there are even more ways to maximize these rewards that you may not have thought of. Part of the strategy involves stacking the 5% cash-back offers with items that tend to go on sale at certain times of the year. Here are a few examples:
Tools
Right after Father’s Day is usually the best time to stock up on tools, which is perfect timing if you have the Discover it® card. The 5% cash back you’ll earn at home improvement stores from July through September can help boost your savings even more. Summer is the time when most of us complete a slew of home improvement projects we’ve been meaning to get to, including painting inside and out, building a new decks, or upgrading windows and doors.
Mattresses
Mattresses often go on sale around Memorial Day, and then again right after Independence Day — the latter of which coincides perfectly with the Discover it® card’s 5% cash back at department stores that quarter.
Linens
If you need some sheets for that new mattress, linens tend to go on sale in August. Pick them up at a department store or on Amazon.com to get an extra 5% cash back.
Furniture
If you’ve just bought a new house or need to replace a ratty old couch, July is a great month to score furniture discounts. Find a good deal at a department store and you’ll get 5% cash back on that big purchase using your Discover it® card.
Appliances and Lawnmowers
According to Lifehacker, September is one of the best months to pick up a lawnmower or upgrade your appliances. If you use your Discover it® card to buy them at a home improvement store, and you’ll likely get the best prices of the season — and 5% cash back to boot.
Clothes
Need to boost your summer wardrobe this June? Look to Overstock.com to buy everything from summer sandals to that new bikini. And with the Chase Freedom® card, you’ll earn 5% back.
Home and Patio
Using the Chase Freedom® will also gets you 5% cash back on all the things you need to decorate your home for those summer barbecues. This June, look for deals on patio furniture, plant stands, and shade umbrellas at Bed, Bath & Beyond.
What to Watch Out For
Earning 5% cash back on certain purchases throughout the year is a tempting proposition, but there are certain caveats to watch out for.
For starters, with either of these cards, you only earn 5% cash back on your first $1,500 worth of qualifying purchases each quarter – or $75. After that, you’ll only earn the standard 1%.
Here are some other tips and things to watch out for to make you’re the one taking advantage of your credit cards (and not the other way around):
Always pay your bill in full.
Although both cards offer 0% APR on purchases for a limited time, you should practice paying your balance in full each month. You won’t benefit from the rewards if you wind up paying interest on your purchases.
Don’t forget to opt in.
With the Chase Freedom® card, you need to “opt in” each quarter to earn the full 5% cash back on qualifying purchases. It’s easy to do online, but some might see it as an additional hassle.
Compare other perks.
If you’re trying to decide between the Chase Freedom® and Discover it® cards, don’t forget to look at the other perks each offers. The Chase Freedom®, for example, offers a sign-up bonus after you meet a minimum spending requirement in the first three months. Meanwhile, the Discover it® card offers a free FICO score on your monthly statement.
Know your redemption options.
With the Discover it® card, you can redeem your rewards in a few ways – as a direct deposit into your bank account, a statement credit, a payment through one of Discover’s partners (such as iTunes, Facebook, or Amazon.com), or a gift card to any number of retailers.
With the Chase Freedom® card, you have even more options. Not only can you redeem for cash back, but you can also redeem your points for gift cards or travel gift cards. And if you also have a Chase card that earns Ultimate Rewards points, such as the Chase Sapphire Preferred®, you can even combine your points and transfer them to a number of hotel loyalty and frequent flyer programs, such as British Airways, IHG, Marriott, Hyatt, Virgin Atlantic, and Southwest Airlines.
When it comes to the best no annual fee cards, the Chase Freedom® and Discover it® cards are in a league of their own. Not only do you earn a constant rate of 1% cash back on everything, but you can also score big with lucrative 5% categories that rotate every quarter.
The key to maximizing these rewards is to look for subtle and not-so-subtle ways to save on purchases you were going to make anyway. And once you do, you get to enjoy the fun part – looking for ways to spend all of the rewards you’ve earned.
Do you try to maximize your rotating rewards categories? What strategies do you use?
The post Rotating Rewards: Smart Summer Buys in Discover and Chase Freedom Categories appeared first on The Simple Dollar.
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