How to Effectively Use Credit Card Points—And When to Avoid Them

Read Time: 5 Min

Credit card reward programs can be an excellent tool for savvy consumers to maximize value from everyday spending. As a financial planner, I often hear clients ask how to get the most out of their points and whether relying on these rewards is a sound financial strategy. Let’s explore the best ways to use credit card points and the scenarios where it might not be the right approach.

The Upside of Credit Card Points 

When used responsibly, credit card points can provide significant value. Here are some strategies to make the most of them: 

1. Match Rewards to Your Spending Habits: Choose a credit card that aligns with your largest spending categories. For instance, frequent travelers may benefit from travel-focused cards, while families might prefer cards offering cashback on groceries and gas. 
2. Take Advantage of Signup Bonuses: Many credit cards offer generous signup bonuses if you spend a certain amount within the first few months. If you already have a planned large expense, this can be a great way to earn a large number of points quickly. 
3. Redeem Points Strategically: Not all redemption options are created equal. Points often hold the most value when redeemed for travel or gift cards rather than for cash back or merchandise. 
4. Stack Rewards: Combine your credit card rewards with retailer discounts, cashback apps, or loyalty programs to maximize value. For example, using a grocery store’s loyalty program in conjunction with a card that offers bonus points on groceries can double your savings. 
5. Monitor Expiration Dates: Some rewards programs have expiration policies, so be sure to use your points before they vanish. Setting reminders or earmarking points for specific goals can help you avoid losing out.

When Credit Card Points Are Not Worth It 

1. Carrying a Balance: If you carry a credit card balance, the interest charges will quickly outweigh the value of any rewards. Credit card rewards are only beneficial when you pay your balance in full each month. 
2. Overspending to Earn Rewards: Spending more than you can afford just to meet a bonus threshold or earn extra points defeats the purpose. Rewards are not worth falling into debt. 
3. Ignoring Fees: Many high-reward credit cards come with annual fees. Before signing up, calculate whether your typical rewards earnings will outweigh the cost of the fee. If not, opt for a no-fee alternative. 
4. Chasing Points at the Expense of Other Goals: Sometimes, the focus on earning rewards can distract from more critical financial goals, such as saving for retirement, building an emergency fund, or paying down debt. 
5. Underutilizing Perks: If you’re not fully utilizing a card’s benefits (like lounge access, travel insurance, or higher redemption rates on specific categories), you may not be getting enough value to justify the effort or cost. 

Tips for Responsible Use 

1. Set a Budget: Treat your credit card like cash. Only charge what you can pay off by the due date. 
2. Track Your Rewards: Regularly check your rewards balance and expiration policies. 
3. Reevaluate Annually: Review your card’s benefits annually to ensure it’s still meeting your needs. Your spending habits may change over time. 

Credit card points can add value to your financial strategy, but only if used wisely. As a financial planner, my advice is to prioritize overall financial health above chasing rewards. Focus on reducing debt, saving for the future, and maintaining a solid financial foundation—the rewards will follow. 

If you have questions about how credit card rewards fit into your financial plan, feel free to reach out for tailored advice. 

 

 

*The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Many of us would like to give our kids or grandkids a good start in life, but leaving an inheritance can be trickier than many realize. Tax laws are constantly changing, and the strategies that worked years ago may have more limited benefits today.

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax or legal professional before modifying any part of your overall estate strategy.

How are you preparing for retirement? This is the most important question of all. If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes in your life, conferring with a financial professional experienced in retirement approaches may offer some guidance.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and

produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite