What Can You Do With Credit Card Rewards
After earning credit card rewards, you can redeem them through the card’s rewards program. Redemption options depend on the card you have. Here are the most common things you can do with credit card rewards:
- Get cash back, either as a statement credit on your credit card bill, a direct deposit to a bank account, or as a check
- Use them for travel through the card issuer’s travel portal, as a statement credit toward previous travel purchases, or by transferring them to airline or hotel loyalty programs
- Redeem them for store gift cards
- Redeem them for products or services
When you log in to your online account, there will be an option to redeem rewards. You can choose this option to see what your redemption options are and pick the one you want.
The value of your credit card rewards can vary depending on the redemption method. For example, if your credit card earns travel points, you may also be able to redeem them for cash back, but at a lower rate per point. Before using your rewards, compare what they’ll be worth with each redemption method so you can get the most value from them.
How To Redeem Travel Rewards
How you go about cashing in your travel rewards depends on the type of card you earned them on and what you;want to do with them. In most cases, you’ll be redeeming either through your card issuer or through the loyalty program tied to the card.
REDEEMING REWARDS ON GENERAL TRAVEL CARDS
With a general-purpose travel card, you;can usually use your points to;pay for;travel ahead of time by going through;your card;issuer’s booking portal, which operates much like Orbitz or Expedia. Many cards also allow you to;turn;your points into;statement credit for travel expenses already incurred. With this option, you use your card to book travel however you want, and then wipe out the cost on your statement by applying your points to your balance. You’ll also go through your issuer’s rewards portal to transfer points to airline or hotel programs.
You might have other options for using your points on general travel cards, such as for cash back or gift cards, but be careful with these options. You’ll often get a lower value per point for non-travel redemptions.
REDEEMING AIRLINE OR HOTEL REWARDS
Best Category Card/best For Online Shopping
Reward rates:;3% cash back in choice category ; 2% back at grocery stores/wholesale clubs ; 1% on everything elseAnnual fee:;$0Bonus redemption threshold:;$1,000 in first 90 daysGood to ExcellentIntro APR:;0% on purchases and balance transfers 13.99% to 23.99% variable;13.99% to 23.99% variableBalance transfer fee:;3%
You May Like: What Credit Score Is Needed For Allegiant Credit Card
What Does It Mean By Eligible Spend
Eligible Spend is a term where a bank use to classify the type of retail purchase that is qualified for a cashback. This could mean that out of all retail purchases you have made with your credit card, only a select few is considered eligible for a cashback.
Below are some credit card transactions that are not considered as Eligible Spend and will be excluded for cashback:
- Balance transfer, cash advance, EPP transactions
- Payments of fees, charges and taxes
- Any government-related transactions
- Payments to charity or social services
How To Maximize Cash
The most important strategy for maximizing cash-back rewards might be surprising: don’t overspend. Once you start earning points and bonuses and rewards for spending, you may be tempted to try to rack up your rewards, but that will get you further away from your financial goals, not closer. Cash-back rewards are a great way to earn a little money back on current spending, but as soon as you spend more than you normally would just to get rewards, the net value will be negative. One way to avoid overspending is by using a budgeting app that keeps you honest, like You Need A Budget.;
The second tip is to never miss a payment. If you have to pay a late payment fee or an interest payment for an outstanding balance, your losses will eclipse your rewards very quickly. We recommend paying off your credit card bill twice a month to be safe, or opting into automatic payments.
Finally, to maximize cash-back rewards, consider adding two or three different credit card offers to your wallet. Cards often target just one or two categories, so you may need to enlist several cards to maximize the returns on your spending. That being said, you also need to factor in the time and energy you spend on credit card rewards. At a certain point, the perfect strategy may be too time-consuming and stressful.
Also Check: How To Check Your Visa Credit Card Balance
Blue Cash Everyday Card From American Express: Best For Tiered Cash Back
Why we picked it: This card offers 3% cash back at U.S. supermarkets , 2% at U.S. gas stations and at select U.S. department stores and then 1% on general purchases.
Pros: As a welcome offer, youll earn $100 in statement credits if you spend $2,000 with your card during your first six months of card membership. Youll also earn 20% back on Amazon.com purchases in your first six months for up to $150 back, also in statement credits. Theres also a 15-month 0% introductory APR on new purchases .
Cons: The yearly $6,000 limit on the 3% purchase category could cut into your potential earnings. Depending on your spending habits, you could earn more with the Blue Cash Preferred, which offers higher rewards, but charges a $95 annual fee .
Who should apply? The Blue Cash Everyday is all about rewarding essential purchases, which is why its a great addition to nearly anyones wallet.
Read our Blue Cash Everyday® Card from American Express review or jump back to this cards offer details.
Where Do You Spend The Most Money
Select a card that matches up with where you spend and how much you spend. Review your spending for the past few months. If your spending isnt concentrated in any particular purchase category, consider a flat-rate card for all eligible purchases. If you spend heavily in certain areas gas and groceries, big-brand retailers, restaurants, etc. a tiered card or rotating categories card with higher rates can help you maximize your cash back potential.
Also Check: Can I Get My Credit Card Debt Forgiven
Higher Welcome And Intro Offer
The Chase Ink Cash offers a more generous welcome offer of $750 bonus cash back after spending $7,500 on purchases in the first 3 months from account opening. It does have a higher spend requirement in a shorter time frame, but if a large known expense is on the horizon, this could be a more enticing road to take.
The Ink Business Cash also comes with a 0% introductory APR on purchases for 12 months, then a standard APR of 13.24% – 19.24% variable applies. The card does not have an intro balance transfer offer.
How To Compare Cash Back Credit Cards
As you shop for reward credit cards, there will probably be multiple cards that you like. To pick the best one, you’ll need to compare them. The Ascent’s tool to compare credit card offers can help with this. You’ll be able to get a feature-by-feature comparison of multiple cash back cards. Here’s what to look at to decide on the right card:
- Cash back rate: This is the most important feature. A higher cash back rate will save you more money whenever you use your card. The card you choose should have either bonus categories that match your spending habits or a high flat rate on purchases.
- Annual fee: Most cash back cards are no-annual-fee cards, although there are some exceptions. Cash back cards with annual fees tend to have higher cash back rates. Those higher rates can make up for the annual fee if you spend enough, but you’ll need to do the math on the rewards you’ll earn to make sure.
- Sign-up bonus: Quite a few credit cards include introductory bonus rewards, such as $100 to $200 when spending a certain minimum in the first three months. A welcome bonus like this is an easy way to collect cash back. If there are a couple cards you like, you may want to pick the one offering the most bonus cash.
To learn more, check out this video on how to pick the best cash back credit card.
Recommended Reading: How To Withdraw Money From Credit Card
For High Earners: Rogers World Elite Mastercard
The Rogers World Elite Mastercard often doesnt get as much love as it deserves. With this card, you earn 1.5% cash back on all your purchases. Best of all, you can redeem that cash back towards most of your purchases made with your card within the last 90 days.
The 3% cash back on purchases made in U.S. currency effectively means you earn 0.5% in cash back on purchases once you factor in the 2.5% foreign exchange fee. In other words, this is a card for online shoppers and U.S. travellers to consider. The one major caveat : You must charge at least $15,000 in purchases on the card every 12 months to keep it, otherwise youll be downgraded to the entry-level Rogers Platinum Card that earns a less impressive 1% cash back on everything.
- Welcome bonus: $25 in cash back rewards when you make your first card purchase
- Earn rate: 3% cash back on purchases in U.S. currency; 1.5% on all other purchases
- Income requirement: $80,000 or $150,000
- Additional benefits: Travel insurance; cash back on foreign purchases
Consider Using Multiple Credit Cards
Using too many credit cards at once is generally frowned upon, as this can be a sign of insolvency. However, a strong credit-card strategy can involve pairing cards to maximize benefits. For example, the TD Cash Back Visa Infinite offers 3% back on gas, groceries and recurring bills, but only 1% on everything else, while the Tangerine Money Back Card has no annual fee and offers 2% back in up to three spending categories of your choice. Strategically it would make sense to select drug stores, parking/public transit and restaurants to fill in the gaps on everyday spends without having to pay more for the better earn rate.
You May Like: How To Transfer Money Off Credit Card
Who Are The Best Cashback Credit Card Providers
As well as finding a cashback credit card which is the most rewarding for you based on your spending habits you should also consider how good the cashback credit card provider is.
But unless youve been a customer before thats pretty hard to do.
Fortunately, Which? has rated 29 of the largest credit card providers to help you find out what theyre like for customer service, fees and benefits before you sign up.
You can check out reviews of the biggest names in the cashback credit card market like American Express and Aqua in our best and worst credit providers.
Travel Rewards Credit Cards
A travel credit card earns rewards you can redeem for travel. This can include airfare, hotel stays, vacation rentals, car rentals, cruises, and much more. Travel credit cards usually offer special travel perks and no foreign transaction fee. Most come with an annual fee, though.
There are a few different ways to use travel rewards depending on the card. Some cards let you redeem rewards at a fixed rate toward cash travel purchases.
Airline and hotel cards earn rewards in the provider’s loyalty program. United Airlines cards earn miles in the United MileagePlus program, Hyatt cards earn points in the World of Hyatt program, and so on. With this type of travel rewards card, you can use your rewards for bookings through the loyalty program.
Certain cards in major credit card rewards programs offer transferable rewards. That means you can transfer your points to any partners in the card issuer’s rewards program. Let’s say you have the American Express® Gold Card. You could send rewards to the airline and hotel partners in the American Express Membership Rewards program.
Compare more picks: Check out The Ascent’s best travel rewards cards
You May Like: Is Paypal Credit Card Good
For Flat Rate: Td First Class Travel Visa Infinite Card*
Some people want to earn points when they travel, as well as on an ongoing basis. If this sounds like you, then the TD First Class Travel Visa Infinite Card is our top choice. You can rack up TD Rewards points throughout the year and then easily make a redemption through Expedia for TD. With this card, youll get 3 points per $1 spent on all your everyday purchases and 9 points per $1 spent when you make online purchases through Expedia for TD. That means youre earning a 1.5% and 4.5% return respectively in travel points. Expedia For TD is just like the regular Expedia platform, so youll have no problem finding ways to redeem your points.
With the annual fee of $120 rebated for the first year and a welcome bonus of up to 100,000 pointswhich has a travel value of up to $670 $500 when you book travel purchases through ExpediaForTD.comthis is one of the best travel credit card offers available right now.
How To Decide: What Is The Best Credit Card For Me
To decide which credit is the best for you, you need to look at your priorities. If you normally carry a balance or you want to reduce your debt, then a low-interest or balance transfer card should be the only types you consider.
People who always pay off their full balance every month need to decide whether a travel or cash-back card makes more sense for them. Travel cards can offer lucrative rewards, but if you dont like to travel, theres no point in you getting a travel credit card. If this sounds like you, then a cash-back card may be the way to go.
Now that youve got your category of card selected, take a look at the earn rate, additional, benefits and which type of points you earn for each card. If you happen to spend a lot on gas and groceries, then look for a card that has a high earn rate for those categories.
The annual fee should also be a consideration in your decision making, but if you think youre getting good value out of your additional benefits and youre making more back than you paid with the fee, then it shouldnt be a big deal.
Read Also: How To Change Usps Address Without Credit Card
Capital One Quicksilver Cash Rewards Credit Card: Best For Unlimited Rewards
Why we picked it: For those who prefer to keep it simple, this great gimmick-free card has no annual fee and offers unlimited 1.5% cash back on all purchases.
Pros: Rewards remain valid for the life of the account and there are no caps on how much you can earn. Theres also no minimum you have to meet to start redeeming cash back. You can earn $200 if you spend $500 in your first three months of card membership. Theres also a 15-month 0% introductory APR on purchases .
Cons: While unlimited rewards are an attractive offer, note that the Citi Double Cash earns a higher flat-rate cash back at 2% without charging an annual fee .
Who should apply? While there are plenty of other cards out there offering much higher cash back rates, the unlimited 1.5% back on every purchase has the potential to offer major value for anyone in the market for a pared-down cash back card.
Read our Capital One Quicksilver Cash Rewards Credit Card review or jump back to this cards offer details.
Best For Earning Flat
The Capital One Quicksilver Cash Rewards Credit Card is one of the most popular cash back credit cards because it’s a straightforward no-annual fee card that earns easy to redeem rewards.
It earns an unlimited 1.5% cash back on all purchases and has no annual fee, no authorized user fee, and no foreign transaction fee. This means you can add as many authorized users as you want and you can use the card worldwide without worrying about additional fees.
Cash back earned with the Capital One Quicksilver Cash Rewards Credit Card can easily be redeemed for cash back, statement credits, and gift cards.
- No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won’t expire for the life of the account and there’s no limit to how much you can earn
- 0% intro APR on purchases for 15 months; 15.49%-25.49% variable APR after that
- Pay no annual fee or foreign transaction fees
Also Check: What Is The Best Credit Card For Military
Should You Pay An Annual Fee To Own A Rewards Card
As youre shopping for a rewards card, youll likely come across cards with extremely lucrative rewards and sign-up bonuses that put all other cards to shame. Often these cards come with annual fees, which at first may seem like a bummer. But, despite what you might think, annual fees often arent a losing proposition. Often, you can profit from a card with an annual fee.
How do you know if a card with an annual fee is worth the cost? Simple. Do a little math. If the extra rewards outweigh the annual fee, then the card is worth its weight.
Lets look at an example. Lets say youre looking at two cards, Card A and Card B. Card A has an annual fee of $100 and a 5% earn rate. Card B has no annual fee and a 3% earn rate.
First, you want to determine how much you need to spend in order to make up for the $100 you spent on the annual fee. In order to earn $100 on Card A, you need to spend $2,000. So, at $2,000 you break even on Card A.
But now lets look at Card B. If you spend $2,000 on Card B, you earn $60. Because theres no annual fee thats $60 you earn outright. In other words, if you only spend $2,000 in one year, then Card B would be more profitable, even with the extra rewards on Card A.
At what point does Card A become the better deal? $5,000 is the breakeven point. When you spend $5,000 on Card A you earn as many rewards as Card B . After $5,000 Card A becomes more profitable.