[UPDATE Some offers mentioned below have expired. You can view the current offers from our partners here — Citi ThankYou Preferred, Citi Prestige, Citi Thank You Premier and Capital One Venture Rewards. DISCLOSURE: Cards from our partners are mentioned below.]
Are you tired of using your rewards credit card to earn frequent flyer miles, or getting a few dollars of cash back credited to your account each month? Frequent flyer miles don’t take you as far as they used to, and some people may be looking for something more permanent than just cash back that they add to their disposable income.
You don’t need to opt for typical credit card rewards if you don’t want to, especially when there are so many other options.
Here are five unexpected ways that you can use your credit card rewards. (And if you’re in the market for a new card, consider this guide to the best cash rewards credit cards in America.)
1. Make Mortgage or Student Loan Payments
Citi offers several cards that earn points in its ThankYou Rewards program and although it advertises ways to redeem points for gift cards, merchandise and travel reservations, there is another way buried in the fine print. (Full Disclosure: Citibank, as well as Barclaycard, Capital One and Bank of America advertise on Credit.com, but that results in no preferential editorial treatment.) Citi will allow you to redeem your points for one cent each toward student loan repayment or a monthly mortgage payment, in denominations of $25, $50, $75, $100, $250, $500, $750 and $1,000 only. In fact, the loan can be held by any institution, it doesn’t have to be from Citi. But to do so, you have to call their ThankYou Service Center. Cards that earn ThankYou rewards include the Citi ThankYou Preferred card, which offers double points on dining and entertainment purchases with no annual fee. Citi also offers its ThankYou Premier (you can read the full review of this card here) with a $95 annual fee, and the Citi Prestige premium travel rewards card with a $450 annual fee (you can see the expert review here).
2. Save for College
Another way to use your credit card rewards is to build a college savings account for yourself or someone else. The Upromise MasterCard from SallieMae and Barclaycard offers rewards that are deposited into an eligible college savings plan, including 529 plans with a tax advantage. This card offers 5% rewards at participating merchants including online shopping partners, restaurants and online travel agents. You also earn 2% at department stores and movie theaters, and 1% cash back on all other purchases. There is no annual fee for this card.
3. Give to Charity
Many credit cards offer some way to give your rewards to charity, but many impose the same merchant fees on non-profits that they do on purchases from every other company. On the other hand, Capital One’s No Hassle Giving Site allows you to make donations to over 1.2 million verified charities while ensuring that 100% of your contribution reaches the non-profit of your choice. You can make a contribution using your credit card rewards earned from cards like the Capital One Venture Rewards card (you can read a review of this card here), or by making a charge to any Capital One card.
4. Invest in Your 401K Account
Another way to use your credit card rewards is to save for retirement with a tax-deferred plan. The Fidelity Rewards Visa Signature card offered by Elan Financial Services features 2% cash back on all purchases deposited into your eligible Fidelity account, including 401K retirement accounts. There is no annual fee for this card.
5. Fund Your Savings Account
While you can always transfer your cash back rewards to your savings account, you have to have the dedication and commitment to remember to do so every time. Bank of America makes this easy by offering a 10% customer relationship bonus when you deposit your credit card rewards into your eligible checking or savings account held by Bank of America. Its BankAmericard Cash Rewards credit card offers 3% cash back on gas and 2% cash back on groceries and at wholesale clubs for the first $2,500 in combined grocery and gas purchases each quarter, and 1% cash back elsewhere. There is no annual fee for this card.
No matter what you use your credit card rewards for, it’s important you don’t overspend just to get a kickback from these cards. Doing so can cause you to rack up excessive credit card debt, which may harm your credit score. To see how your spending habits may be affecting your credit, you can check out your free credit report summary, updated each month, on Credit.com.
At publishing time, the Citi ThankYou Preferred, Citi Prestige, Capital One Venture Rewards and BankAmericard Cash Rewards credit cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for these cards. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
Image: Martin Dimitrov