Earning cash back with a rewards card is a simple way to put some money back in your wallet. The question is, after you redeem a large amount of cash rewards, what do you do next?
If you’ve recently made a large redemption, these tips can help you come up with a plan for spending, saving and earning more cash back on future purchases.
1. Make your redeemed rewards work for you
First, let’s look at how you chose to redeem your rewards. Depending on your card, the options may include turning cash back into:
- Statement credit
- A deposit into a bank account
- A paper check
- Gift cards from partner retailers
- Merchandise from partner retailers
- Charitable donations
The choices you have may be unique to the card and how your cash rewards are earned. Some cards, for example, let you earn a percentage back of what you spend as cash. Others let you earn back a percentage of what you spend as cash points that can then be redeemed for actual cash.
Regardless of how you redeemed you rewards, think about how you can make the most of them now or in the future when you’re ready to use them. Here are a few examples:
- A statement credit can work in your favor if you have a large purchase to pay off.
- Depositing cash rewards into your bank account can give your savings a boost.
- If you redeemed cash back for gift cards or merchandise, you can set those aside for holiday or birthday gifts down the line.
When you have a plan for using the rewards you’ve redeemed already, it’s much easier to ensure that they don’t go to waste.
2. Review your budget
If you’ve redeemed most or all of your cash points, accumulating more might be your first priority. Take a look at your regular spending patterns to see where you have opportunities for earning more cash back.
For example, if you’re an everyday spender then you might get the most cash back on things like groceries, gas or retail shopping. Figure out how much you typically spend in a month on those things, then make a plan to charge those purchases to your card. (Just remember to pay your balance in full to avoid pesky interest charges.)
Look at the bigger budget picture as well. Is there a large purchase on the horizon that could help you score a significant amount of cash rewards in one go? Charging new appliances, furniture or a vacation, for example, could help you rack up cash rewards fairly quickly.
3. Consider opening a new cash back card
Getting a brand-new cash rewards card is something else to consider following a redemption if you’re interested in landing a large introductory bonus. Some things to keep in mind about cash rewards bonuses for new accounts:
- You’ll typically have to meet a minimum spending requirement to qualify.
- You may be ineligible if your card issuer sets rules for how often you can qualify for new account bonuses.
- Any card you open to earn a bonus should fit your regular spending habits so you can continue earning rewards after the introductory period.
If you’re looking for cash back suggestions, here are a few rewards cards you might consider:
- Chase Freedom® and Chase Freedom Unlimited®
- CapitalOne® Savor® Cash Rewards Credit Card
- Bank of America® Cash Rewards Credit Card
- Capital One® Quicksilver® Cash Rewards Credit Card
- Blue Cash Preferred® Card from American Express
Remember, check the fees and APR of any card you’re considering as well as the other card perks. Specifically, check your options for redeeming cash rewards you’ve earned to make sure you’re able to use them how you want to.
Also, be on the lookout for any other perks that could make a cash back card more enticing, such as price protection, a 0% introductory APR on purchases or balance transfers or special discounts and rewards bonuses when you shop the card’s linked online mall.
4. Plan ahead for your next redemption
Once you’ve gotten the ball rolling on earning more cash back rewards to replace the ones you redeemed, start thinking about what you’ll use them for the next time around. Specifically, think about how you can make your cash back stretch as far as possible.
While your card might give you several ways to redeem cash back, they might not offer the same value. For example, cash rewards might be worth 1 or 1.25 cents per dollar when you redeem for a statement credit but only a half cent if you’re redeeming for gift cards.
Taking time to do the math on redemptions can help you get the most bang for your buck from cash rewards. If your card issuer is offering a cash back bonus for choosing one redemption option over another, weigh that in the balance as well.
For instance, you might be offered $5 extra for redeeming cash points for a gift card. Compare the value of your cash rewards in that scenario to what it would be if you redeemed for something else.
Last but not least, don’t make the mistake of letting your cash rewards expire. Some rewards card issuers do place an expiration date on how long you have for redeeming rewards. So when it comes to putting your cash back to work, make sure you use it (wisely) before you lose it.
Personal finance writer and small business expert
Rebecca lives on the North Carolina coast with her two children an assorted collection of pets. In addition to freelance writing, she also authors a blog focused on making and saving money.