If you’re a credit card user, you know the benefits. You can get rewards like cash back or points on your purchases. But what do you do with those rewards? There are several ways you can investing with credit card rewards; here are some ideas:
Get cash back
You can use your cash back rewards to pay off your bill or save it for a rainy day. You can spend it on something other than travel or dining out, although that’s an option. For example, if you have a high balance on your credit card and want to lower it quickly, putting a little bit of each month’s cash back into paying down the balance is a great way to save money while getting closer to debt-free. Some cards offer other perks in addition to the cashback, which makes them even more appealing than others.
Pay your credit card bill
You can use your rewards points to pay your credit card bill.
You can redeem those rewards on your monthly statement if you have a cashback rewards credit card. This is free money; all it takes is a few clicks online or over the phone to get your money sent to your account with no strings attached.
You can even combine cash back and points when paying off your balance. For example, some cards allow for flexible redemption options where you can use as little as 1 point or as much as 10,000 points for each dollar spent on purchases (assuming that’s an option).
Redeem rewards for gift cards
Rewards are a great way to save money. You can redeem your rewards for gift cards, which are a popular way to save on travel, dining out and shopping. Gift cards that can be used anywhere are also great holiday presents—you could even treat yourself by giving yourself the gift of cash back!
Use points to book travel.
- You can use your rewards points to book travel.
- Each credit card has a different redemption value, so you’ll need to check the terms and conditions for specifics. Some credit cards only allow you to redeem for statement credits or gift cards. Still, others have partnerships with specific airlines, hotels and vacation companies that allow you to use your points on their websites.
- You may also be able to pay with points when you book travel through the respective websites of these partners. In this case, the number of points will vary based on what type of reward you select (e.g., free flight vs. free hotel stay) and how much it costs.
“Your cash back credit card earns a higher rate in certain categories or at certain merchants, make sure to use it where it gets the highest value,” suggests SoFi financial advisors.
Credit card rewards are beneficial because they allow you to get cash back on what you spend rather than having to save money to buy something. This means that if you’re looking for a way to earn some extra cash or points while also getting a great deal on things that matter most (like travel!), then credit cards may be right for you!
