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The Points Guy believes that credit cards can transform lives, helping you leverage everyday spending for cash back or travel experiences that might otherwise be out of reach. That's why we publish a variety of editorial content and card comparisons: to help you find a great card to turn your goals into reality.
Our site may earn compensation when a customer clicks on a link, when an application is approved, or when an account is opened with our partners, and this may impact how or where these products appear. While we don't cover all available credit cards, our editorial team creates and maintains all of the analysis of these cards, and our content is not influenced nor subject to review by any credit card company, bank or partner prior to (or after) publication. Please view our advertising policy and product review methodology for more information.
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6 common mistakes to avoid when using a cash-back credit card
Ben Luthi is a Salt Lake City-based freelance writer who covers travel, credit card rewards and personal finance. He's constantly on the lookout for deals to book his next trip and enjoys traveling with his two children.
Credit card writer Danyal Ahmed is an avid traveler, averaging about 100,000 aeronautical miles per year. He regularly applies that knowledge and his expertise in credit cards to his role as a credit card writer at TPG.
also contributed to this story
February 17, 2025 • 8 min read
The cards we feature here are from partners who compensate us when you are approved through our site, and this may impact how or where these products appear. We don't cover all available credit cards, but our analysis, reviews, and opinions are entirely from our editorial team. Terms apply to the offers listed on this page. Please view our advertising policy and product review methodology for more information.
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Quick summary
Many people miss out on maximizing cash-back rewards by not matching their card to their primary spending categories.
Using only one card can limit your total rewards; combining multiple cards may help you earn more across different types of purchases.
Cards with a modest annual fee can sometimes provide higher rewards that outweigh the cost, especially for frequent spenders in certain categories.
Failing to pay balances in full each month can negate rewards due to interest charges, and not activating rotating bonus categories or using shopping portals can leave additional rewards unclaimed.
What to consider
Review your spending habits regularly to ensure your card aligns with your top expense categories.
Some cards require quarterly activation for rotating bonus categories, and missing this step can result in lost rewards.
Shopping portals and targeted offers can provide extra value but may have enrollment requirements or limited availability.
What you'll miss from the article
A detailed breakdown of common mistakes and practical strategies to maximize value from cash-back credit cards.
Generated by AI with support from our editorial team.
Comments
By commenting, you agree to our Community Guidelines to help create a positive space for conversation. The responses below are not provided or commissioned by the bank advertiser, our partners, or The Points Guy (“TPG”). They have not been reviewed, approved, or otherwise endorsed by any of these parties. All responses are submitted by individual contributors, and neither the bank advertiser, our partners, nor TPG are responsible for ensuring that all posts and/or questions are answered.
Cash-back credit cards offer cash rewards on the purchases you make. Many come with other perks and features that can save you money on your monthly statement or on interest charges.
But with so many different options out there, it's possible that you're not using the best card or strategy to maximize the value you can get from your cash back card.
Here are some common mistakes people make with cash-back credit cards — and how to avoid them.
You're not using the right card for your spending
Cash back rewards programs come in all shapes and sizes; to avoid leaving real money on the table, you should check that you're using the right card for your spending habits.
Review your budget and where you spend most of your money (i.e., gas, groceries, dining etc.). Determine how well your current card aligns with those specific spend categories, and then take some time to look into other cards that might provide more cash back based on your top expense categories.
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For example, suppose you spend a lot on groceries and want a card with no annual fee.
In that case, the no-annual-fee Blue Cash Everyday® Card from American Express (see rates and fees) is a good choice, since it offers 3% cash back on groceries at U.S. supermarkets, U.S. gas stations and U.S. online retail purchases on up to $6,000 per calendar year in purchases for each category (then 1%), and 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit and at Amazon.com checkout.
It offers 6% cash back (for the first year, then 3%) on the category of your choice from the following options: gas and electric vehicle charging stations, online shopping (including cable, streaming, internet and phone services), dining, travel, drugstores/pharmacies, home improvement and furnishings.
This card also offers 2% back at grocery stores and wholesale clubs and 1% back on everything else (on up to $2,500 in combined purchases each quarter in the choice category and at grocery stores and wholesale clubs, then earn unlimited 1% thereafter).
Finally, if you'd rather earn a solid reward rate on every purchase — regardless of the category — the Citi Double Cash® Card (see rates and fees) might be the ticket. It offers 2% cash back on everything — 1% back when you make a purchase and another 1% back as you pay it off.
You're only using one card
Sticking with just one credit card simplifies things, but even if your card's rewards program hits all of your top spending categories, you could still get more value by using multiple credit cards.
For example, the Capital One Savor Cash Rewards Credit Card offers 3% cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Walmart® and Target®), 5% cash back on hotels, vacation rentals and rental cars booked through Capital One Travel and 8% cash back on Capital One Entertainment purchases. However, the rest of your purchases will net you just 1% back.
With the Capital One Savor card, most of your purchases will likely fall into the 1% rewards rate, which is uninspiring. With the Wells Fargo Active Cash card, you're getting a great rewards rate on non-bonused spending, but you don't have the option to earn more in your top spending categories.
By combining the two cards, you get to earn at least 2% cash rewards on purchases, with the chance to earn more on top spending categories. This is only one example of credit card combinations that can power up your wallet.
You're excluding cards with annual fees
Many cash back cards don't charge an annual fee, so it's natural to bristle a bit when you see one. But some cash-back cards with an annual fee make up for the cost by offering even better reward rates than their no-fee counterparts.
The Amex Blue Cash Preferred earns 6% cash back on U.S. supermarkets (on up to $6,000 per year, then 1%) and select U.S. streaming subscriptions. With the U.S. supermarket category alone, you can get up to $360 in cash back every year, far outpacing the card's annual fee. Cash back is received in the form of Reward Dollars and can be redeemed as a statement credit and at Amazon.com checkout.
You're paying more in interest than you're getting in cash back
Credit cards make it simple to carry a balance. Most have no set repayment terms, and minimum payments are often easy to meet. But if you don't pay your bill in full every month, you'll be slapped with high-interest charges on your unpaid balance.
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It's best to prioritize paying your bill on time and in full every month to avoid losing some of your rewards value to interest charges. Use your card's AutoPay feature or set a reminder for yourself so that you never miss a payment.
You're not using shopping portals or offers to earn more
Some card issuers have shopping portals or specific offers that can help you earn more rewards on top of what your cash-back credit card already offers.
For example, Amex Offers allows you to add specific discounts or bonus opportunities to your card in your online account (enrollment is required, and terms apply; not all cardmembers will be targeted for the same offers).
Past offers have included discounts like $100 off a charge of $500 or more at Hilton and $35 off a Ray-Ban purchase of $150 or more. Chase does this with its own similar platform, Chase Offers.
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Taking advantage of either of these options is an easy way to multiply your rewards haul on certain online and in-store shopping trips.
Additionally, you can take advantage of cash back websites like Rakuten and TopCashback to earn even more.
You're not activating rotating bonus categories
If you have a card like the Chase Freedom Flex® (see ) or Discover it® Cash Back, you might be able to earn as much as 5% cash back on up to $1,500 in purchases in various categories that change every quarter.
You could be missing out if you're not paying enough attention to the current quarter's bonus categories while shopping. Even if you're using another card for most of your spending or for other bonus categories, it's still worth taking advantage of a quarterly bonus category until you've hit the spending cap to rake in all that extra cash back.
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Additionally, you'll need to activate the bonus every quarter. Fortunately, there's usually some leeway with how much time you have to activate it, but if you forget, you'll leave money on the table.
If you're using cash back credit cards, it's important to ensure that you have the right ones in your wallet and that you're taking advantage of all the benefits they offer. If you've committed one or more of these mistakes, look for opportunities to adjust your approach and get even more value out of your cards.
