How I’ve earned credit card rewards without paying a dime in interest for over a decade

This piece was originally published on August 9, 2023.

While plenty of people love earning points and miles with credit cards, there’s a hidden secret many rewards enthusiasts don’t like to share. The fact is, some consumers who earn rewards also carry debt on their cards, at least part of the time.

This fact became evident when Bankrate surveyed Americans on chasing rewards while in debt in February of 2024. Per the new data, 44 percent of credit cardholders carry credit card debt from one month to the next. Among them, 67 percent said they still try to maximize credit card rewards, despite owing money on their cards.

With the average credit card interest rate on accounts assessed interest currently at 22.63 percent according to data from the Federal Reserve, people who mix credit card rewards and debt aren’t doing themselves any favors. After all, earning between 1 to 2 percent back — and even up to 5 or 6 percent back in bonus categories — is a losing proposition when you’re paying credit card interest rates that are four times as high.

With that in mind, you should really only be using rewards credit cards if you have a way to pay your balance in full each month. If you need to carry a balance, that’s also okay, but you should look at low-interest credit cards or any number of 0 percent APR credit cards instead.

How to earn credit card rewards without paying interest

It’s definitely possible to earn credit card rewards without paying interest, mostly because credit cards typically offer a grace period between the end of your billing cycle and when your payment is due. If your credit card offers a grace period, federal law requires this period to last at least 21 days.

As long as you pay your credit card statement balance in full before your payment due date, you won’t owe interest on purchases in most cases. One such exception is if you used your credit card to get a cash advance, in which case the grace period does not apply.

On a personal level, I take several steps each month to ensure I don’t pay a dime in interest while earning rewards. These steps include using a monthly budget, tracking my spending and paying my credit cards off every week.

Using credit cards in conjunction with a monthly spending plan

One step my partner and I take each month to avoid credit card debt is writing up a monthly budget or spending plan. We happen to use a form of budgeting called a zero-sum budget, which essentially has you allocate all the money you bring in each month toward bills, discretionary expenses and savings goals.

Using a budget means we know approximately how much we spend on regular bills and expenses, and that we have spending goals in categories that fluctuate like groceries, gas, clothing and entertainment. From there, we use credit cards for purchases like we would if we were paying with debit or cash, except we get to earn cash back and travel rewards along the way.

Tracking spending throughout the month

I also use credit cards to track our spending throughout the month — as in, I log in to our various credit card accounts and add up how much we have spent on various purchases and in all the categories we track. This helps me see how much we have spent in discretionary categories, which in turn helps me know how much we have left throughout the month.

Not only does this help me stick to our monthly spending plan, but it helps me know for sure I have the cash in the bank to back up our credit card purchases.

Paying credit cards off weekly

Finally, my partner and I also pay off our credit card balances on a weekly basis. This has helped us stay on top of our finances in several ways, and it is probably the most important thing we do to avoid overspending and credit card debt.

Obviously, paying off our credit card balances weekly helps us avoid all credit card interest, and we get the benefit of on-time payments on our credit card accounts each month. Paying our balances weekly also forces us to hand over the cash for our purchases on a regular basis, and this helps us feel the real weight of our spending more often.

Lastly, paying our credit cards off weekly helps us stick to our budget better. For example, if we discover we charged the full amount in our budget allocated to groceries by the 25th of a given month and already paid the balance off, this forces us to skip the store and eat what we have at home until the beginning of the next month.

The bottom line

Credit card debt is never helpful for anyone, but it also poses a unique problem for people trying to earn rewards. After all, the best rewards credit cards can entice you to spend more since you’re getting something in return for each purchase — yet, the interest you pay on debt can wipe out the benefit of rewards in a hurry.

To avoid credit card interest over the long haul, it helps to use a written budget and track your spending throughout the month. Paying off your credit card bills a few times per month can also help you “get ahead” with rewards without paying for the privilege.