Cashback Credit Card Tips

12 experts share advice on maximizing cashback rewards

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Man giving his credit card to the waiter

According to a 2018 study conducted by Finder, approximately 80 percent of cardholders choose a credit card based on its quality of rewards and benefits. With different strokes (or swipes in this matter) for different folks, we were interested in finding out what experts are spending their cashback rewards on and what advice they’d give to those looking to spend their rewards. We spoke to 12 experts, including credit experts, finance editors, professors of finance and more to ask what their preferred method of spending their cashback rewards are.

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Robert Farrington, Founder of The College Investor:

I love cashback rewards cards – specifically cards that allow you to invest and deposit your rewards right into your brokerage account. It makes saving and investing so easy. Cashback is my favorite because I find redeeming points to be challenging. I never feel like I’m getting a good deal, and I don’t want to devote the time to transferring them or seeking it out. With cashback, it’s simple!

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Sam Dogen, Found of Financial Samurai

The prudent way to use your credit card rewards is for statement credit. Not only are you not spending time looking for something to buy, you’re also being fiscally responsible by paying down debt. Where people get in trouble with their credit card rewards is by using them to buy something they don’t really need. If you must buy something with your credit card rewards, then write a list of things you absolutely need and then go shopping, not the other way around!

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J. Money, Founder of BudgetsAreSexy

Use cashback rewards to launch a new side hustle!! $0 startup, and if it fails just move on to the next idea. ;) You’ll be forced to stay scrappy and creative!

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Clint Haynes, Founder of NextGen Wealth

While it’s not the most exciting way to spend your credit card cashback rewards, my recommendation is to always use them against your current balance. With that being said, I would highly suggest applying them to your balance every month because even if you let the cash back build, you’re not earning any interest on this money. Even more important, if you’re carrying a credit card balance from month to month and paying interest on that balance, applying your cashback monthly is crucial.

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Richard Serlin, Adjunct Professor of Personal Finance
John and Doris Norton School of Family and Consumer Sciences; College of Agriculture & Life Sciences, University of Arizona

The most important thing is to note that whatever the credit card it should be paid down to zero each month. There is nothing savvy about debt. A credit card should not be looked at as a way to borrow, or to spend more, but rather it should be looked at and used as a way to do transactions faster and easier, that gets you perks and discounts you don’t get with cash. The card with the best perks and discounts will depend on your personal situation. For example, my family and I travel a lot, so some of the hotel and air travel credit cards give us the highest return per dollar that we put on the cards. But, you don’t want to use the card to purchase things that it really wouldn’t be prudent to purchase otherwise. That’s not necessary, as there are cashback cards, and cards with perks for items you would purchase normally, like Amazon’s Prime card.

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Derek Sall, Owner of Life And My Finances

If you’re still in debt, use the cashback money toward that debt. If you’re not, invest in your own sanity by buying whatever the heck you want! I just got a $50 Target gift card from my credit card rewards. I handed it to my wife and said, “Have fun!” We spend way too much of our lives allocating our money to dozens of different accounts. Consider the rewards a bonus. Loosen up and live a little.

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Elaine Luther, D. Dc., EA, SHRM-CP, PHR; Professor, Rowland School of Business, Point Park University

The best cashback rewards are ones earned on items you actually want, need, and/or use frequently; for amounts that you can afford without incurring monthly interest charges on outstanding balances. Just remember, any benefits are quickly offset by high percentage interest rates, and frivolous purchases. In order to maximize your benefits, you need to recognize your buying habits, and prepare a plan for future purchases.

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Alexa Serrano, Banking Editor, Finder.com

If you’re a big traveler and don’t plan to open up an airline miles card, a cashback rewards card could be just as valuable. Some cashback rewards cards, like the TD Cash Credit Card, give you the opportunity to cash in your rewards points for airline tickets, hotels, car rentals and travel-related merchandise. While you’ll need to put aside a lot of your earned points to exchange it for an airline ticket, it’ll be worth it if you wanted to travel somewhere but didn’t have the funds. With the TD Cash Credit Card you’ll be looking at about 43,980 points for a $439.80 round trip ticket. For a hotel stay that’s $104 a night, you’re looking at 10,400 points a day. For a rental car that’s worth $30 a day, you’re looking to spend 30,000 points per rental day.

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Kashif A. Ahmed, CFP; President, American Private Wealth; Professor of Finance

Unless you specifically care about airline miles, opt for credit cards that give back good old fashioned cash. This way you can redeem it for outright statement credit (i.e. reduce your bill), or for gift cards for pretty much any retailer. And also every credit card; and even loyalty programs like Hilton Honors; allow you to make purchases on Amazon using cash back from your credit cards and loyalty program points. Since most folks use Amazon regularly, and for pretty every kind of purchase, this is a great strategy.

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Brian Meiggs, Personal Finance Expert at My Millennial Guide

Most people would take cashback rewards and either spend it on entertainment, save it, or plan to invest it. For me, I use those cash rewards to pay for regular check-ups for my four-legged friend. That’s right, typically when I rack up $100-150 in cash back, I use the money to take my dog to the vet for a check-up. This one visit can actually save me thousands in emergency costs. Many pet owners fail to follow up on regular check-ups that should be done every six months and that can be a very costly mistake.

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Lance Cothern, Credit card expert and Founder of MoneyManifesto.com

Most people use credit card rewards for fun, but you can get a lot more value by using them toward your goals. If you’re trying to pay off debt, earn and use cashback credit card rewards to pay off your loans. If you’re trying to build an emergency fund, deposit your rewards in a savings account. Even those saving for retirement can use credit card rewards to invest. While this isn’t as fun as going on vacation, it can help improve your finances in a big way.

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Megan Horner, Credit cards publisher, Finder.com

My advice is to first decide what you want to redeem rewards for, whether that’s paying down loans, investing, or donating to charity, and then find a card that makes it easy to use rewards in that way.
There are plenty of credit cards designed to help you use your rewards in creative ways, such as paying off student loans or investing in stocks. Here’s some examples:

  • The Fidelity® Rewards Visa Signature® Card allows you to invest your rewards for retirement, education or other goals. You can funnel your rewards into an IRA, HSA, 529 or brokerage account.
  • The Sallie Mae Accelerate℠ card helps you pay off your student loans. The card offers an extra 25% bonus on rewards used toward student loans.
  • The Charity Charge World Mastercard® Credit Card makes it easy to redeem rewards toward your favorite charity.

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