How Do You Spend Your Credit Card Rewards?

what do you spend your credit card rewards onCredit card rewards are amazing.

Assuming you follow all of the rules, such as never paying a penny in interest or fees, you basically get free money for spending money you would spend anyway.

If you play the game right, you can easily end up with over $1,000 in rewards per year.

In fact, just in the last six month, Tori and I have accumulated over $1,300 in credit card rewards through earning sign up bonuses.

The question is, how will we spend that money?

Pretend They Are Part Of Your Normal Budget

Arguably, the smartest way to treat credit card rewards is to treat them as if they were part of your normal budget.

Use the money for whatever is your current top financial priority.

Pay Down Debt

If you have any debt, especially high interest rate debt, then you may want to put the money toward paying that debt down. When we were fighting to pay off Tori’s over $80,000 of student loan debt, we often used credit card rewards to go toward our extra principal payments.

However, at this time, we only currently have two mortgages as far as debt goes. We’re not in any type of hurry to pay either one off at this point, so I doubt we’ll use our rewards to pay down debt.

Invest For The Future

Investing for the future is a solid option for people with no debt. Even small amounts of money can increase greatly over time when it is invested and the power of compounding returns start to kick in.

If we wanted to be responsible with our credit card rewards, we’d probably invest them in either one of our retirement accounts or our taxable investments account.

However, at this time we’re feeling pretty comfortable with the amount of money we’re putting toward our investments, so we’ll probably end up spending our money on one of the following options.

Spend It On Vacations

I love vacations. I hate paying for vacations. Luckily, credit card rewards have allows us to take many of our vacations completely for free, or at least at a greatly reduced rate.

We generally use our credit card rewards to help pay for our cruise vacations. We can use hotel points for a free stay the night before our cruise, points to erase the purchase of our cruise off our credit card and cash back to pay for gas, parking and any other miscellaneous expenses that may pop up.

Of course, you can use credit card rewards to pay for flights to many vacation destinations, but we normally find ourselves driving on our vacations.

Buy Upgrades You Wouldn’t Normally Pay For

In the past, we’ve used our rewards to pay for upgrades that we probably wouldn’t have paid cash for. For instance, when we moved into our current home, all of the door knobs and hinges were brass and we hate brass.

Luckily, we earned a $500 Home Depot gift card and we were able to replace all of our brass with brushed nickel.

You can also use credit card rewards to pay for things like upgraded light fixtures, appliances or any other version of an item you wouldn’t normally pay to upgrade.

Go On A Once In A Lifetime Experience

If there is something you’ve always wanted to do, but never felt like you could justify spending the money on it, consider saving credit card rewards cash back to pay for the experience.

Whether the experience is skydiving, going up in a hot air balloon or even playing in the World Series of Poker, you can eventually go on the experience if you save up enough of your cash back rewards from credit cards.

Going forward, we’ll probably continue to spend most of our credit card rewards on either vacations, upgrades or once in a lifetime experiences. We worked hard to escape student loan debt and we’re already investing a healthy percentage of our income, so we decided to tag our rewards and fun money.

What about you? What do you spend your credit card rewards on? I’d love to hear stories of your favorite purchases or trips in the comments below!

Image by: Beverly & Pack Text added by: Lance Cothern

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. When money was very tight for us, we redeemed cash rewards whenever we had a shortfall in our budget. Then, we moved on to putting the cash rewards directly into our more fun targeted savings accounts, like vacation. I don’t think we’ve redeemed any rewards in a year or two now, because I’ve started thinking there has to be something better to do with them! I didn’t think I had the opportunity to play the travel rewards game in grad school, but maybe I can switch my system now.

  2. If I had debt and credit cards with rewards, I’d probably speed my debt payment. Second option would be to save the money for our emergency fund or purchase something we are planning on purchasing (and saving for).

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