SAN ANTONIO — Credit card rewards can help you beat inflation, but about a quarter of cardholders, almost 40 million people, have not redeemed their rewards in the past year according to a CreditCards.com study. That means you could be leaving hundreds of dollars on the table.
“When you’re living paycheck to paycheck, when you’re on a tight budget, every little bit matters, especially now when everything seems to be getting more expensive every day,” said Matt Schulz, the chief credit analyst with LendingTree.
Cashback is the most popular reward.
“Credit card rewards can be an inflation buster they give you a little bit of money back on things that you’re already spending money on,” Schulz said.
Inflation pushed up the cost of flights and hotels. Travel rewards can also bring breathing room to your trip budget.
“Whatever you can do to help knock down some of those costs can be really helpful,” Schulz said. “You can get free flights, you can get free hotel rooms, you can get free lounge access.”
Be aware rewards can expire, so use them or you might lose them.
“You don’t want to become a points millionaire or don’t hoard them for hoarding’s sake,” said Ted Rossman, a senior credit analyst with CreditCards.com. “Save them up to a point and then you have a goal and you have a trip or you have a cashback redemption and you do that but don’t let them sit there because they could lose value.”
Rewards are really only an inflation buster if you do not carry a credit card balance.
“I don’t want you to pay 20% in interest just to get 2% in cash back, but if you can pay your bills in full, rewards are free money,” said Rossman. “Rewards are great, but not if you’re paying high-interest rates.
“Interest rates are sky high,” Schulz said. “If you carry a balance regularly on your credit card, then your focus should be knocking down that debt and reducing interest, not on getting rewards. It really doesn’t matter much if you are paying 25% interest on that balance.”
Get the most mileage out of your rewards by doing some research on how to best use them. Rewards could be worth more depending on how and where you redeem them.
“Not all redemption methods are equal,” Schulz said. “For example, you may be able to get more bang for your reward points by redeeming with a certain place or in a certain way.”
“Sometimes you do need to put a little legwork in to find the optimal redemptions,” Rossman said.
Do not know what rewards you have? Call your credit card issuer to find out so you make the most of your money.