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Credit card rewards can help take the sting out of inflation, with some of the best cash-back credit cards offering as much as 6% back in bonus categories. However, many Americans fail to take advantage of their reward earnings.
According to a new CreditCards.com survey, 23% of rewards cardholders haven't redeemed any rewards over the past year. That's an improvement from the 31% of rewards card users who didn't redeem any rewards in 2020 — but almost a quarter of cash back and travel cardholders still leave money on the table.
CNBC Select explains how you can make sure you're getting the most out of your credit cards' rewards, as well as taking a closer look at how Americans are using (not using) the rewards they get from swiping.
How to make the most of your credit card rewards
To make sure you're using your credit card rewards to their full potential, consider the following:
- Find a credit card that works for you. Think whether you prefer the simplicity of cash back or if you'd rather focus on getting the best value from your points or miles. Next, consider your budget and see where you spend the most — your credit card's bonus categories should match your spending habits. For example, the Blue Cash Preferred® Card from American Express is an excellent choice if your family spends a lot at U.S. supermarkets. Or, if you're an avid online shopper, the Prime Visa can offer generous rewards (see rates and fees). Terms apply.
The Blue Cash Preferred® Card from American Express is a low-fee card with generous cash-back rewards and useful ongoing benefits, such as a monthly Disney Bundle credit. (Enrollment required for select benefits mentioned)
- High cash-back earnings for U.S. supermarkets and streaming services
- Intro-APR offer for purchases and balance transfers
- No annual fee for the first year
- It's less rewarding after the first year because of the annual fee
- Bonus rewards for U.S. supermarkets are capped
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply and find out your welcome offer. As High As $300 cash back* after you spend $3,000 in purchases on your new Card within the first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply, and if approved: 1. Find out your offer amount 2. Accept the Card with your offer 3. Spend $3,000 in 6 months 4. Receive the cash back. *Cash back is received in the form of Reward Dollars that can be redeemed for a statement credit or at Amazon.com checkout.
- $0 intro annual fee for the first year, then $95.
- Enjoy 0% intro APR on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 19.49%-28.49%.
- Plan It®: Buy now, pay later with Plan It. Split purchases of $100 or more into equal monthly installments with a fixed fee so you don't have the pressure of paying all at once. Simply select the purchase in your online account or the American Express® App to see your plan options. Plus, you'll still earn rewards on purchases the way you usually do.
- Earn 6% cash back at U.S. supermarkets on up to $6,000 per year in eligible purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at eligible U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) purchases and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit and at Amazon.com checkout.
- Get up to a $10 monthly statement credit after using your enrolled Blue Cash Preferred® Card for a subscription purchase, including a bundle subscription purchase, at DisneyPlus.com, Hulu.com, or Stream.ESPN.com U.S. websites. Subject to auto-renewal.
- Terms Apply.
- See Rates & Fees
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7% of each transaction after conversion to US dollars
The Prime Visa is only available to Amazon Prime members ($139 for an annual membership and $14.99 for a monthly membership) but is very rewarding for Amazon purchases.
- High rate of return at Amazon.com, Whole Foods Market and on Chase Travel purchases
- Offers an automatic gift card welcome bonus after card approval
- Option to earn rewards or take advantage of 0% promo APRs
- Includes a wealth of travel insurance protections
- Requires an Amazon Prime membership for approval
- If you choose the promo APR, you won't earn rewards on those purchases
- Rewards can't be pooled with other Chase credit cards
Rewards
- Earn unlimited 5% back at Amazon.com, Amazon Fresh, Whole Foods Market and on Chase Travel purchases with an eligible Prime membership
- Unlimited 2% back at gas stations, restaurants, and on local transit and commuting (including rideshare)
- 10% back or more on a rotating selection of items and categories on Amazon.com with an eligible Prime membership
- Unlimited 1% back on all other purchases
Balance transfer fee
Either $5 or 4% of the amount of each transfer, whichever is greater
- Avoid carrying a balance. Interest charges will negate the value of your rewards. If you're planning a big purchase and know you'll need time to pay it off, look into 0% intro APR credit cards that offer rewards. Here are some examples that CNBC Select ranks as among the best available:
The Citi Simplicity® Card has amazing intro-APR offers and is particularly valuable for balance transfers due to its lower introductory fee.
- Long intro APR offers for balance transfers
- Low intro-fee for balance transfers
- No annual fee
- No rewards
- No welcome bonus
The Capital One Savor Cash Rewards Credit Card is one of the most rewarding options for earning cash back in categories such as entertainment and dining without paying an annual fee. Plus, you can combine its rewards with Capital One's travel cards to convert them into transferable miles.
- One of the most rewarding cash back cards for entertainment and streaming services
- No annual fee
- Easy-to-earn welcome bonus
- High APR
- Requires a good to excellent credit score
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a one-time $200 cash bonus once you spend $500 on purchases within the first 3 months from account opening
- $0 annual fee and no foreign transaction fees
- Earn unlimited 3% cash back at grocery stores (excluding superstores like Walmart® and Target®), on dining, entertainment and popular streaming services, plus 1% on all other purchases
- Earn 8% cash back on Capital One Entertainment purchases
- Earn unlimited 5% cash back on hotels, vacation rentals and rental cars booked through Capital One Travel
- No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
- 0% intro APR on purchases and balance transfers for 12 months; 18.74% - 28.74% variable APR after that; balance transfer fee applies
- Top rated mobile app
Balance transfer fee
Introductory fee of 3% of the amount of each transferred balance that posts to your account during the first 12 months that your account is open. After that, 4% of the amount of each transferred balance that posts to your account at a promotional APR that we may offer you at any other time.
- Learn how redemption works. Usually, you can easily redeem rewards online through your account profile.
- Check whether your rewards expire. While most general rewards cards from major issuers earn rewards that don't expire as long as your account is still open, that might not always be the case. Reach out to the card's issuer and make sure you understand the terms of your rewards.
- If you decide on a travel credit card, research your redemption options. Most of the time, you'll find those include transferring your rewards to your card issuer's travel partners. If that seems too complicated, redeeming for travel through the issuer's portal should typically be your next best bet.
- Remember to redeem your rewards. Whether you're saving them for something specific or only occasionally applying cash back to your card balance, don't forget about your rewards. Otherwise, you might be leaving significant earnings on the table. Plus, your points and miles aren't safe from devaluation — especially when it comes to co-branded airline and hotel cards.
How Americans are using their credit card rewards
In the realm of credit card rewards, cash back remains king. During the past year, more than half (55%) of rewards cardholders redeemed their rewards for cash back or gift cards. A quarter (25%) of rewards card users redeemed for travel, such as a free hotel stay or airfare.
Cash back is perhaps the easiest reward currency to maximize. Its value stays consistent across redemption options. Cardholders can typically choose to redeem for a check or statement credit, a deposit to a checking account, or gift cards and purchases at select retailers.
Points and miles, on the other hand, require some strategy to maximize since values fluctuate depending on what you choose to redeem them for. Travel redemptions, such as airfare, usually yield the best returns.
Younger cardholders seem more eager to use their rewards to get places: 42% of Gen Z and 39% of millennials with rewards credit cards redeemed their rewards for travel in the past year. Only 17% of Gen X and 14% of boomers did the same.
Older generations are also more likely to hoard their rewards: 28% of both Gen X and boomers with rewards cards didn't redeem any of their rewards over the past year. In comparison, only 15% of millennials and 18% of Gen Zer rewards cardholders didn't use any of their card rewards.
Why are so many rewards card users sitting on their cash back, points and miles? Fifty-one percent of rewards credit cardholders who didn't redeem any rewards in the past year were saving them for a specific future redemption (51%). Further, 23% said they didn't think their rewards were worth enough to be valuable. Finally, 11% didn't know how to redeem, 9% found rewards programs too confusing and another 9% said they were too busy.
How much unredeemed rewards could be costing you
While you don't have to worry about your cash back, points or miles expiring with most general rewards credit cards, you're missing out on the "free money" your card issuer gives you for using your card. In a high-inflation environment, those rewards earnings could help protect your budget from rising prices.
Ted Rossman, senior industry analyst at CreditCards.com, provides an example using the data from the Bureau of Labor Statistics. In 2021, the average annual expenses for a household were $66,928. While half of this spending might be tough (or unwise) to put on a credit card (think car loan and mortgage payments), that still leaves about $33,000 that could be charged to a rewards card.
Say you have a flat-rate cash-rewards credit card that earns 2% cash rewards on eligible purchases — for example, the Wells Fargo Active Cash® Card. If you spend $33,000 on it annually, you'd earn $660 in cash rewards per year.
The Wells Fargo Active Cash® Card is great if you want simplicity thanks to its flat-rate 2% unlimited cash rewards on purchases and $0 annual fee.
- High, unlimited flat-rate return on purchases
- Intro APR on purchases and qualifying balance transfers
- Lower introductory balance transfer fee
- Up to $600 of cell phone protection against damage or theft (subject to a $25 deductible)
- Charges a 3% foreign transaction fee
- Balance transfer fee increases to 5% of each transfer (minimum $5) after 120 days
- Limited redemption options unless you pair it with a Wells Fargo card that allows point transfers
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- Earn a $100 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 18.49%, 24.49%, or 28.49% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don't expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Balance Transfer Fee
3% intro for 120 days from account opening, then up to 5%, min: $5
Foreign Transaction Fee
3%
If you prefer to spend your rewards on travel, the Capital One Venture Rewards Credit Card also earns 2X miles on everything you buy. It could yield 66,000 miles in the scenario above — or $660 to spend on airfare, hotel stays or car rentals through the Capital One Travel portal. After factoring in the $95 fee, that's $565 in annual value. However, you may be able to get even more value if you transfer the miles to travel partners.
The Capital One Venture Rewards Credit Card has a reasonable annual fee and earns flexible travel rewards, which makes it a great travel card for both beginners and frequent travelers.
- Valuable welcome offer
- You can transfer miles to Capital One's travel partners
- Global Entry or TSA PreCheck application fee credit
- No foreign transaction fees
- Lacks ongoing travel benefits such as statement credits or lounge access
- Limited bonus spending category that only applies to certain Capital One Travel bookings
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- LIMITED-TIME OFFER: Enjoy $300 to use on hotel and vacation rental bookings through Capital One Travel in your first cardholder year, plus earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening – that's more than $1,000 in travel value
- Earn unlimited 2X miles on every purchase, every day
- Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel
- Miles won't expire for the life of the account and there's no limit to how many you can earn
- Receive up to a $120 credit for Global Entry or TSA PreCheck®
- Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
- Enjoy a $50 experience credit and other premium benefits with every hotel and vacation rental booked from the Lifestyle Collection
- Transfer your miles to your choice of 15+ travel loyalty programs
- Top rated mobile app
Balance transfer fee
$0 at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
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Bottom line
Almost a quarter of Americans haven't redeemed their credit card rewards in the past year. While many were saving them toward a specific purchase, others didn't think their rewards were valuable — or simply didn't know how to redeem and found them confusing.
If you want to know more about your card rewards and their value, it can be helpful to do some research online. If you still have questions, don't hesitate to reach out to your card issuer by calling the number on the back of your card. Card rewards can be a valuable way to minimize the impact of inflation on your budget — but only if you make a point of using it.
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For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
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