Posted by Nikoletta Ventseslavova

We all like free stuff. Whether it is merchandise or travel perks, free is good. And, for many, free cash is even better. But where do you get all this free stuff? The simple answer, of course, is your credit card. It is possible for you to maximize your reward points so that you earn them faster, and even get cash back every month:

Step 1: Make a Budget
Your first step is to make a budget. In order to maximize your finances, you need to have a plan. A spending plan is necessary in order to ensure that you don’t overrun your income. Figure out what expenses you have to pay each month, from groceries to gasoline to utilities. List out the bills that you pay automatically. But, in order to make it work, you need to have a plan.

Step 2: Put Everything You can on the Credit Card
Next, decide which credit card you want to use for rewards or cash back. Decide which credit card will help you best reach your goals. If you are interested in travel, choose a rewards card that allows you to build up miles that you can use. There are reward programs that allow you to redeem points for merchandise as well. And, if you are interested in cash, look for a credit card with as generous a cash back program as possible.
As soon as you figure out which card will work best for you put everything you can on that card. Pay for groceries, make online purchases, buy gas, and pay your utility bills with the credit card. If you can switch your automatic debits to a credit card, do that. The idea is to build up your points or cash back as quickly as possible. Be sure that you keep within your budget, though. Keep within your budget as you do this though; using your credit card to build points isn’t carte blanche to spend beyond your means.

Step 3: Pay Off Your Credit Card Balance Each Month
This is critical to your plan. You have to pay off your credit card balance each month in order to maximize your rewards or cash back. If you carry a balance, you will pay a high interest rate. In fact, the interest charges will be so high that it will offset any rewards or cash back that you earn. A credit card that charges 14.99% interest will more than overcome even a generous 5% cash back rewards program. If you want to maximize your free stuff, you must pay off your balance each month. This is why sticking to a budget is so important if you want more cash back — and not fall into the debt trap.

Something to Keep in Mind: Pay Off Debt First
In order to get the best results from this plan, it helps to pay off any credit card debt you have first. This plan won’t work as well if you are still paying a high rate of interest on credit card balances. Pay off your debt, and then put this plan into effect.

Janet Hutchins writes for Credit, a blog about responsible credit use, personal finance, and maximizing credit card rewards.