When should you pass up bigger credit card rewards?
If you have a rewards credit card in your wallet, you might have聽chosen it because you want聽the highest possible reward rates. Maybe聽you鈥檙e earning 3% cash back with a聽, or 5% cash back on rotating bonus categories such as groceries and Amazon purchases.
If so, you鈥檙e earning higher credit card rewards than I am.
My main credit card, the one I carry everywhere and use for almost every purchase, pays 2% cash back 鈥� but it聽deposits those rewards directly into my son鈥檚聽.
Why聽do I settle for rewards that aren鈥檛 always as high as they聽could be in absolute dollars? Because college savings requiring聽no additional聽effort or expense on my part are what I value most.
The whole point of rewards is that they give you聽a little something extra for maintaining a strong credit score and using the聽card when you shop. I can鈥檛 put as much money as I鈥檇 like toward college savings for my kid, so for me, that 2% is a treat 鈥斅爏omething extra that exists outside聽my regular budget.
Credit card rewards can fulfill desires聽that aren鈥檛 covered by the typical household spending plan.
- Travel rewards.聽Watching airline miles or hotel points build up in your rewards account each month聽can fuel many an escapist fantasy.聽聽offer the promise that all you have to do to land on a beach chair in Maui is keep on paying the bills聽with your card every month聽and save your points. Every dollar spent brings you a little closer.
- Cash back.聽Rather than promising a specific treat, cash back gives you the flexibility to use your rewards on just about聽anything your heart desires. Some people opt to take their聽聽as a statement credit,聽giving them a little relief from their monthly bills. Others use their cash rewards to pay for something they couldn鈥檛 otherwise afford, like a day on the golf course or at the spa.
- 惭别谤肠丑补苍诲颈蝉别.听Many credit card issuers聽offer a聽聽where聽you can redeem your points directly. You can choose from the available merchandise or cash in your points for a gift card to a major retailer. Although redemption rates for merchandise often aren鈥檛 as high as for the other two options above, it can be fun to choose a gift for yourself that you wouldn鈥檛 ordinarily buy.
Whether you choose to save your rewards for the vacation of a lifetime,聽use them to pay off a small chunk of your monthly credit card bill, or buy yourself a聽little present, the right rewards for you might not carry the absolute highest possible value. Perhaps, like me, you鈥檇 rather have rewards that will increase in聽value over time, like college account contributions, or money to help you pay off your student loans or your mortgage.
The best rewards are the ones that ultimately give you the most satisfaction.
This article first appeared at .
