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Ten Great Ways to Use Credit Card Rewards

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Many frugal experts will shy readers away from using credit cards because it can be easy to overspend. But credit card rewards can actually help you save.

Here are ten ways to use credit card rewards to benefit you:

1) Statement credits: Some cards, like the American Express Blue Sky card, allow you to use your points as a statement credit toward qualified travel purchases, including any flights, hotels, or car rentals. If you do any traveling at all, this is a useful reward that is basically like cash toward your statement.

2) Gas rebates: A straightforward reward for something you always use, gas rebates can be an easy way to make sure you are using your points for something you will use.

3) Fund your IRA: Some cards will deposit your cash rewards directly into an investment account or 529 college fund. For example, the Fidelity Rewards American Express Card will make a $50 deposit for every $2,500 in purchases.

4) Hotel stays: If your card offers travel rewards, consider skipping the rewards tickets and using your points to pay for the hotel, instead. Hotel stays are often cheaper than flights, so can be purchased with fewer miles.

5) Travel insurance: Travel rewards cards often offer great travel protection, making their annual fee cheaper than the purchase of comparable insurance. For example, the American Express aeroplan card includes automatic coverage of up to $250,000 in travel accident insurance.

6) Cash back rewards: More than half of credit-card users choose to get their rewards as cash. Look for a card that maximizes the percent back on the items you actually buy the most. One nice straightforward option is Capital One’s No Hassle Cash Rewards Card, which pays 2% cash back on gas and groceries and 1% back on everything else.

7) Retail shopping: If you do much of your shopping in one place, you might find that the big benefits of merchant rewards pay off for you. Merchant rewards points can be worth almost twice the dollar value of travel reward points. Chase’s Amazon.com Rewards Visa offers triple points on Amazon purchases, which can add up fast, and a $40 Amazon credit for signing up.

8 ) Catalog products: Many rewards cards offer a catalog of home items and electronics. Generally, these items can be purchased much more cheaply with cash at an online retailer than with points. But, if you have points that are about to expire, these purchases can use a small number of miles and don’t require any additional expenditure.

9) Gift cards: Much like catalog products, they can be purchased with a small number of points, making them a great way to use points that would otherwise expire. And unlike catalog products, they can be used to buy a huge variety of products in the future.

10) Frequent Flyer Miles: Rewards cards are most known for their frequent flyer programs. If you tend to travel on one airline, choose a card for that airline. Otherwise, consider a flexible card like Capital One’s VentureOne Rewards Visa, which lets you spend accumulated points on travel with any airline or hotel.

When signing up for a rewards card, be careful that the annual fee doesn’t exceed the card’s benefit for you. And read the fine print for exceptions. For example, even one late payment on the American Express Blue Sky card can cost you all your rewards points for that billing cycle.

With a little caution and research, credit card rewards can be a great perk for purchases you are already making!


4 Responses to Ten Great Ways to Use Credit Card Rewards

  1. And everybody loves gift cards, so there is always something to do with your points, even if you’ve seen all the good movies and don’t have time to take that round-the-world cruise this year.

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