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 grocery stores, restaurants, gas stations, select rideshares and online shopping, up to the quarterly maximum when 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:
The Chase Freedom® card lets you earn 5% cash back on your first $1,500 spent in categories that rotate every quarter and one point per dollar on all of your other purchases.
This card actually offers a $200 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 (then ongoing 14.99% - 23.74% Variable APR) 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.
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. Earn 6% Cash Back on select U.S. streaming subscriptions. Plus you’ll get 3% cash back at U.S. gas stations and on transit including taxis/rideshare, parking, tolls, trains, buses and mores, and 1% cash back on all other purchases.
While this card does charge a $95 annual fee (See Rates & Fees), 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
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.
The Bottom Line
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?
For rates and fees of the Blue Cash Preferred® Card from American Express, please click here.
Please Note: Information about the Discover it® Cash Back and Chase Freedom® have been collected independently by TheSimpleDollar.com. The issuer did not provide the details, nor is it responsible for their accuracy.
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