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A cash back credit card offers the chance to get money back every time you use it, and, unlike travel rewards, cash is infinitely flexible. Among all of the different ways you can redeem your cash back, investing it can be a great way to supplement your other investing efforts.

Here’s why investing your cash back rewards can be a great idea, how you can do it, and some pros and cons you should consider.

How to Invest Your Cash Back Rewards

Depending on which card you have, you may have different options for redeeming your cash back, which will impact how you can invest it. Here’s a quick breakdown of the different options and how you can leverage your rewards for investing:

Direct deposit. In many cases, card issuers allow you to request a direct deposit to your bank account. Once you trigger the redemption, wait until you receive the money in your account, then transfer it to your investment account.
Paper check. Some card issuers may offer to send paper checks in addition to direct deposit, while others may only offer checks. The process for investing your cash back rewards with a paper check is the same for direct deposits, but you’ll need to wait a little longer to get the check in the mail.
Statement credits. In some cases, a credit card may only allow you to redeem your cash back in the form of a statement credit on your credit card account. If this is the case with your card, you can redeem your rewards for a statement credit and then take that same amount from your bank account and transfer it to your investment account.

You can decide where and how you want to invest your cash back rewards. For example, you may choose to use your cash back to contribute to your individual retirement account, build up your health savings account or a child’s 529 plan, or you may want to open a brokerage account and use your rewards to trade stocks and exchange-traded funds.

Regardless of how you invest your cash back, the process is relatively straightforward.

What About Investment Credit Cards?

There are a handful of credit cards that make the process of investing cash back even easier because they’re offered by brokers or in partnership with a broker.

For example, the Fidelity Rewards Visa Signature Card offers 2% cash back that you can deposit directly into your brokerage account, cash management account, retirement account or others with the brokerage firm.

The SoFi Credit Card also offers 2% cash back when you use your rewards to invest, save or pay down debt with SoFi, and even offers the ability to use your rewards to purchase cryptocurrency.

Other cards, including the Upromise Mastercard and AmEx Platinum Card for Schwab, provide incentives when you use your cash back to invest.

These cards can be great if you only want to invest the rewards you earn with your everyday spending. However, some will give you a lower value if you redeem your cash back in other ways. Also, if you get a brokerage firm’s credit card, you’re stuck with that broker unless you want to go through the process of transferring money to a different firm.

If you want great rewards but don’t want to be tied down to just one redemption option or broker, you may consider a solid cash back card that allows you to invest a little more indirectly.

For example, the Citi Double Cash Card can be a way to get flexibility with a high flat rewards rate. The card offers 2% cash back on all purchases – half when you make a purchase and half as you pay it off.

If you want to maximize your cash back on popular spending categories, the Blue Cash Preferred Card from American Express delivers outsized rewards on groceries, streaming and transportation, offering 6% cash back on select U.S. streaming subscriptions and on the first $6,000 spent at U.S. supermarkets annually (then 1%), 3% back at U.S. gas stations and on transit, and 1% back on everything else.

As you search for the right cash back credit card, think about your spending habits and which card will give you the highest return on your spending, as well as your redemption preferences. In many cases, it might make sense to use more than one cash back credit card in tandem to make sure you’re getting the best rewards rate on all of your spending.

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