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With gas station prices nearing historic highs and supermarket prices racing to do the same, the inflation we’re dealing with today can make sticking to a budget difficult. The best thing you can do as a consumer is get creative about how you spend, whether that’s being more intentional about the frugal habits you choose to use or making sure you’re getting the most value out of each purchase you make.
One of my favorite tricks for combatting rising prices is leveraging cash back credit cards. While I use travel rewards cards for all my travel spending, I’ve found that simple cash back is the easiest way to keep rising everyday prices at bay.
It took some time at the outset to research my different options and decide which credit card mix made the most sense for my spending. But now, all I have to do is make sure I’m swiping the right card at checkout in order to pocket an extra $315 per year on average.
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The gas station and supermarket credit cards I use
As a personal finance writer, I’m all about maximizing rewards. So I’ve got a credit card for just about every spending category, and a catch-all card that earns 2% across the board for any purchases that don’t earn better rewards on any other card.
For gas stations and U.S. supermarkets, I use the American Express Blue Cash Preferred and the Costco Anywhere Visa Card. The Amex earns 6% at U.S. supermarkets and 3% at gas stations. It also comes with up to $120 per year in streaming statement credits (distributed as up to $10 monthly credits) that I use to get a Hulu and Disney+ streaming bundle almost for free after the credit. My Costco card earns 5% at gas stations and 2% on anything else I buy from the warehouse club.
Both cards come with more perks and rewards, but those are the primary ones I use.
The Amex also comes with a $95 annual fee(see rates and fees). The Costco card has no fee, but you do need to have an active Costco membership, which costs $65 per year (or more if you spring for the executive membership).
Still, with how much I earn in cash-back every year and the other savings I enjoy as a Costco member, I more than make up for those fees. It is important, however, to review your credit card mix regularly and make sure you’re still getting enough value out of any card that carries an annual fee.
How I earn $315 per year with these credit cards
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Like many households with a Costco membership, the warehouse club is where I get the bulk of my staples like flour, meat, frozen veggies, and household supplies like toilet paper and laundry detergent.
It’s also the only place I buy fuel because I live a few minutes away from a Costco Business Center, where gas prices are consistently 10 to 20 cents cheaper than neighboring stations.
Whenever I’m shopping at Costco, I swipe my Costco card to get the 5% back on gas or 2% on everything I buy in store. For all of my other staples – like fresh produce, spices and anything else that’s not available at Costco or not available in a quantity I can reasonably use quickly enough – I swipe my Amex card.
It’s as simple as that. Just by being a little more intentional about which credit card I pull out at the cash register, I earned $315 last year. It was an almost even split of a little over $150 in cash back from each card. That doesn’t even include the additional up to $120 in streaming credits I get on the Amex card.
Credit cards can also help with organizing your finances
An unintended benefit of having multiple credit cards for everyday spending is that it makes it easy to see at a glance how much I’ve spent on different categories of my budget. I only use my Amex and Costco credit cards for fuel and supermarkets. So I know whatever the combined balance of those two cards is reflects the total amount I’ve spent so far on those two things.
For my two-person household, I typically try to keep our gas station and supermarket budget under $800 per month. That’s roughly $200 per week.
Each week, I can just glance at the current balance on my Amex and Costco cards and see if I’m on track. If our expenses went over $200 last week, I know this week I’ll be looking through the pantry to plan a menu that requires as few new ingredients as possible.
The key to any credit card strategy is avoiding interest
While credit cards can be powerful financial tools, they also carry some of the highest interest rates of any debt instrument you can get. For any of these cash back perks to matter, it’s extremely important that you avoid spending more than you can afford to pay off in full at the end of the month.
That’s why I have that $800 limit in place and why I check the balance weekly to see how well I’m sticking to it.
If you struggle with impulse buying or get overwhelmed when reviewing your finances, a credit card can be more risk than it’s worth. A single month of paying interest may be enough to offset any rewards you would earn for an entire year. So, make sure you have a plan and budget in place before you try to leverage a credit card rewards program.
