While it’s easy to assume credit card rewards are only lucrative if you like to travel, that’s not really true. In reality, a number of rewards credit cards actually work better when you’re redeeming points for cash back or gift cards. And some even provide more value when you redeem your points for high-dollar gift cards instead of cash back. Go figure.
If you’re into earning free stuff but don’t necessarily want to go on a far flung getaway, earning points for gift cards or a statement credit might be your best bet. With an actual gift card in your wallet, you might actually treat yourself instead of paying household bills or groceries. And if you don’t want to go the gift card route, having a statement credit on your card might make it easier to do something special for yourself.
But, which card should you choose? The following rewards credit cards offer some of the best options when it comes to redeeming your points for gift cards and/or statement credits:
Discover it® Cash Back
The Discover it® Cash Back card offers the perfect opportunity for people who mostly want to earn cash back for statement credits and gift cards. With this card, you’ll earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. Plus, 1% unlimited cash back automatically on all other purchases. Best of all, Discover promises to match the cash back you earn during your entire first year. If you plan to use your card often, this can be a huge boon – and of course, it can definitely help you earn more gift cards.
Not only can you redeem your cash back for a statement credit, but the Discover it® Cash Back makes it easy to turn in your cash back for gift cards as well. Even better, you can often score a $25 or $30 gift card for only 20,000 cash back rewards, which is much better than the basic penny per point value you can expect elsewhere. Here are some more details on the card:
Discover it® Cash Back
Card Highlights Provided by Discover:
- Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
- Plus, earn unlimited 1% cash back on all other purchases - automatically.
- INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
- Redeem cash back any amount, any time. Rewards never expire.
- Use your rewards at Amazon.com checkout.
- Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.
- No annual fee.
The Chase Freedom® card lets you earn 5x points on your first $1,500 spent in categories that rotate every quarter and one point per dollar on all other purchases. This card actually offers a signup bonus after you spend just $500 on the card within the first 3 months.
The fact that it comes with no annual fee and offers 0% intro APR on purchases and balance transfers for the first 15 months makes it a card that could fit a wide range of consumer’s needs. And if its gift cards or statement credits you’re after, this card makes both options easy. Simply redeem your points for either at a rate of one cent per point.
- 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.74-25.49%. Balance transfer fee is 5% of the amount transferred, $5 minimum
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
- Enjoy new 5% categories each quarter
- Unlimited 1% cash back on all other purchases - it's automatic
- Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
- Free credit score, updated weekly with Credit Journey℠
- No annual fee
Blue Cash Preferred® Card from American Express
While you can redeem your cash back for statement credits, gift cards, and merchandise with this card, the Blue Cash Preferred® Card from American Express simply cannot be ignored in this space. With this card, you’ll earn an astounding 6% back on your first $6,000 in grocery spending at U.S. supermarkets each year (then 1%), which will lead to $360 in rewards if you maximize this category. Plus you’ll get 3% cash back at U.S. gas stations and at select U.S. department stores, and 1% cash back on all other purchases.
While this card does charge a $95 annual fee, the welcome bonus alone more than covers it. And if you spend a lot of money at U.S. supermarkets, you’ll recoup that investment several times over. Here are a few more details to consider:
Blue Cash Preferred® Card from American Express
- $200 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
- 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%) - that means spending $60 a week at U.S. supermarkets could earn over $180 back per year.
- 3% cash back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases.
- Low intro APR: 0% for 12 months on purchases and balance transfers, then a variable rate, currently 14.74% to 25.74%.
- Over 1.5 million more places in the U.S. started accepting American Express® Cards in 2017.
- Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
- $95 annual fee.
- Terms Apply.
- See Rates & Fees
How to Maximize Your Statement Credits and Cash Back
Whether you’re after statement credits or gift cards, the strategy for earning as many points as you can is the same. The first thing you’ll want to do is make the most out of your card’s bonus categories – which will obviously depend on which card you sign up for. If you have the Chase Freedom® card, for example, you’ll want to go after your rotating 5x point categories with fervor when they align with your regular spending. Having the Blue Cash Preferred® Card from American Express, on the other hand, means you’ll want to use that card exclusively each time you visit U.S. supermarkets. Here are some additional tips that can help:
- Use your card for everyday expenses and bills. Since the number of points you earn is tied directly to how much you spend, putting as much on your card each month as you can get away with is the smartest way to beef up your point balances quickly. Aside from groceries at U.S. supermarkets and U.S. gas stations, see if you can pay other bills like your cell phone or Internet, utilities, kid’s activities, and even insurance payments with credit.
- Always pay your bill in full right away – treat your card like cash. Credit cards are best used as a complement to your budget. In other words, you should only spend the money if you have the cash in the bank to back it up and pay your card off right away. That second part – paying your bill off right away – is especially crucial as you build good credit habits. It can even be smart to pay your bill off a few times each month if that helps you stay on track.
- Don’t use credit as an excuse to overspend. Using a credit card makes it easier to overspend, forget how much you have spent already, or knock your budget entirely off track. To avoid that trap, get in the habit of tracking your credit purchases as the month ticks on. If you keep a running total, you’ll be in good shape to keep yourself out of trouble as you pursue rewards.
If you don’t necessarily like to travel but want to earn rewards, statement credits and gift cards might be your new best friends. Just remember to read the fine print on any offer you’re considering and use credit wisely and judiciously, and only when you have the money in the bank to back it up.
Earning statement credits and gift cards may be an exciting proposition, but spiraling into debt is no fun at all.
Best Credit Card Points to Redeem for Gift Cards
- Discover it® Cash Back
- Chase Freedom®
- Blue Cash Preferred® Card from American Express
Which do you prefer? Statement credits or gift cards? What is your favorite card to earn these type of rewards?
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