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Cash-back credit cards are a great way to receive an effective discount on all of your purchases, but they are often not as simple as they appear. Many cash-back cards can be a challenge to use because they offer different rates of return for different types of purchases, or have limits on the amount of cash back you can earn in a bonus category (If you’re trying to decide which one would work best for you, check out our guide on the best cash rewards credit cards in America).

If you want to earn the most possible cash back from your rewards card, with the fewest expenses, consider these seven tips.

1. Never carry a balance.

When you carry a balance on a cash-back card you will incur interest charges that will likely exceed the value of any rewards you receive. Unless you can avoid interest charges by paying your statement balances in full each month, you would be better off using a low interest rate card with no rewards program because it will have a lower standard rate than a similar card that offers cash back.

2. Don’t consider cash back when making a purchase.

A cash-back card literally pays you to spend more money, but of course you will always lose out when you make an unnecessary purchase in order to earn additional rewards.

3. Consider a card with an annual fee.

Many cash-back credit cards are offered in versions with and without an annual fee. There are a lot of people who don’t spend enough to justify a cash-back card with an annual fee, and others who refuse to pay an annual fee on principle. Yet for many people, it can be worth paying an annual fee in order to receive significantly more cash back. You should take the time to do the math and decide if a card’s additional rewards are worth paying an annual fee.

4. Watch out for spending limits.

Many cards impose spending limits on bonus categories and only offer the standard amount of cash back once you’ve reached the limit. For example, the American Express Blue Cash Preferred card (read a full review of this card here) offers 6% cash back at U.S. grocery stores, but only on up to $6,000 spent in a calendar year. The Chase Freedom (read the review here) offers 5% cash back at select merchants, but only for the first $1,500 spent each quarter. Unfortunately, it can be hard to keep track of how much you’ve spent on qualifying purchases, so you may have to make an occasional call to your card issuer for this information if it isn’t provided online.

5. Keep track of rotating bonus categories.

The Chase Freedom and the Discover it (you’ll find a full review here) are both popular cash-back credit cards that offer 5% returns on up to $1,500 spent each quarter at feature retailers and on select categories of purchases. Those who hold one of these cards need to remember to login once per quarter to “activate” their bonus categories, and keep them in mind throughout the quarter. Fortunately, both of these cards allow you to activate your bonus retroactively throughout the quarter.

6. Think about using multiple cash back credit cards.

Some cards offer up to 2% cash back on all purchases while others can feature as much as 6% cash back on some purchases and only 1% on the rest. One way to enjoy the best of both worlds is to carry one of each type of credit card. You can use a card with a great bonus at qualifying merchants, while using a separate card with a high level of rewards on all other purchases.

7. Make sure you are using a competitive card.

The market for cash-back credit cards is intensely competitive, so you have to re-evaluate which cards you are using from time to time as new and better cards are being constantly introduced. Just a few years ago, it was common for most cards to offer 1%, but now there are cards that offer 1.5% or even 2% cash back on all purchases, often with no annual fee.

While it’s great to have a card that rewards you for spending, you don’t want to go overboard. To see how your spending habits are affecting your score, check out two of your credit scores for free, updated monthly, on Credit.com.

At publishing time, the American Express Blue Cash PreferredChase Freedom and Discover it cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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