Surprising Uses for Your Credit Card Rewards

Credit card rewards are a great way to earn extra money, and people typically make good use of them such as for extra cash to spend as a credit against their bill. But there are many other creative uses for your credit card rewards points, which can help you save money in all areas of your life. Searching for the best credit card rewards can be tiring but are often worth it in the long run. Here are some of the more unexpected ways to use your credit card rewards to revamp your finances in 2019.

Save for Your Future

If you really want to maximize your rewards, you should be saving them for the future. You can deposit your cash-back rewards into a savings or investment account, then watch them add up and earn interest. Another option is to put your cash-back rewards into a retirement account, like a Roth IRA, that you don’t touch until it’s time to retire. No matter what savings vehicle you choose, the key is to funnel all your cash back into the account and leave it there until you need it.

Save for Your Kid’s Future

College is getting more expensive every year, and with so many other financial obligations, saving for college can be challenging. Putting your cash rewards toward a college fund when your kids are little can go a long way. Open a 529 college savings plan and deposit all your credit card rewards into it every single year. When the time comes to pay for college, your cash rewards will have grown, and you won’t pay taxes on qualified withdrawals.

Help Out Your Kids at College

Once your kids get to college, you’ll find there’s a lot more to pay for than just tuition. They need money for books, their dorm room and for food. Some credit cards allow an authorized person to redeem the rewards points earned on the primary cardholder’s account. So if your child has a credit card, or another account like savings or checking, they can easily redeem the rewards points you’ve earned to pay for their late-night study snacks. This is a nice way to slip your kids a few extra bucks at college without having to drain your savings.

Pay Off Your Student Loans

Are you still paying for your own college experience? Your credit card can be used to chip away at those loans so you can pay them off once and for all. Simply let your rewards points or cash-back rewards accrue, and when your balance reaches a certain level — either one you’ve set or the minimum amount for your card — redeem the rewards and put the money toward your student loans. To pay your loans off faster, make sure you still pay your minimum balance each month, and any additional payments you make — using your credit card rewards or otherwise — goes towards reducing your principal balance.

Chip Away at Your Mortgage

It can be challenging to find “extra” money to throw at your mortgage so you can pay it off faster. But by exchanging your rewards points for cash and directing that to your mortgage, you can put a little extra money towards your principal balance every month, so you’ll pay less interest overall and pay off your mortgage faster.

Build Your Emergency Fund

Finance experts agree that the first step toward financial independence is to have an emergency fund with three to six months of living expenses set aside. This will protect you in the event of a job loss, medical emergency or another unforeseen crisis. It’s not easy to put that money aside for emergencies, especially if you’re just starting out or are paying student loans. Taking the money from your credit card’s cash back or rewards program and putting it straight into your emergency fund will help you get where you need to be faster.

Go On the Vacation of a Lifetime

If you travel frequently, you might have a travel credit card that gives you miles or points that you can use to save on even more travel. You could just use your rewards to take a few dollars off your next trip. Or, you could save up those miles and, when you have enough, trade them in for a trip you’ve always dreamed about. Save up enough points and you can pay for airfare, hotel, a rental car — even meals and spending money — at an exotic destination. Save for your dream trip even faster by looking for a travel credit card that offers a welcome bonus.