How to use credit card rewards to beat inflation this summer

Data out of the U.S. Bureau of Labor Statistics shows that, over the last year, inflation rose 4 percent as of April 2023 — meaning nearly everything we buy costs more today than it did a year ago. This applies to expenses we can’t get around, like groceries and household supplies, but also to energy costs, new and used cars and transportation in general.

While there are always ways to save on bills we have to pay, the right credit card could also help you keep inflation in check this summer and through the remainder of the year if you use it the right way. Unfortunately, not enough Americans make the effort to use their credit cards to their advantage, especially when it comes to redeeming rewards they work hard to earn.

A March 2023 Bankrate survey even found that 23 percent of consumers who responded did not redeem any of their credit card rewards throughout all of 2022. This means more than 1 in 5 Americans are letting unused rewards linger in their accounts for no reason, and all while those rewards are becoming less valuable due to inflation over time.

If you want to know how to use credit cards to beat inflation this summer, there are several strategies you can use to make this happen. Read on to find out how to use rewards points to save on travel and everything else you buy throughout 2023 and beyond.

Redeem cash back for statement credits

While not enough people are redeeming their rewards, the survey did show consumers were more likely to redeem cash back than other rewards categories. In fact, 55 percent of respondents who did redeem their rewards opted for cash back or gift cards over other options.

Those sitting on a stash of rewards can easily use their cash back to combat inflation and high prices in general. For example, redeeming for cash back often means getting a check in the mail that can be used for groceries, household bills and more. Likewise, redeeming for statement credits actively reduces the amount of one’s credit card bill, keeping more money in your pocket over time.

Even redeeming rewards for gift cards can help battle inflation. After all, many rewards cards offer gift cards to retailers that offer household essentials, including options like Walmart, Lowe’s and Target.

Pick up a flexible rewards credit card

Picking up a flexible rewards credit card through a program like American Express Membership Rewards or Chase Ultimate Rewards, for example, can also help you fight inflation, particularly if you have travel plans on the horizon. After all, cards in flexible programs let you cash in your rewards for easy options like cash back or gift cards if you need to, but you can also save on travel expenses if you have a trip coming up.

With credit cards that offer transferable points, you can turn your rewards points into airline miles or hotel points to get better redemption values. As just one example, you could transfer Chase Ultimate Rewards points to a partner like Southwest Rapid Rapid Rewards, where the average point value is 1.5 cents apiece according to Bankrate valuations.

From there, you could use your new Southwest points to book a flight instead of paying cash, although you’ll have to pay a nominal amount in airline taxes and fees (around $6 one-way for domestic flights).

Book travel through credit card portals

According to a 2023 Bankrate survey, just 20 percent of summer vacationers are using credit card rewards to offset inflation this year. Instead of leaving rewards on the table, see if any rewards cards you own let you book travel with a better-than-normal redemption value. The Chase Sapphire Preferred® Card and Chase Sapphire Reserve®, for example, get you 25 percent and 50 percent more value for your points, respectively, when you use them to book travel through the Chase portal. This discount can apply to airfare, hotel stays, rental cars and more.

This means that, not only are you using your points to get travel you don’t have to pay for, but you’re getting a better redemption value than the typical 1 cent per point you get for other redemptions like cash back and statement credits.

Use money-saving offers to get something back

Some credit card rewards programs offer a selection of deals that let you get something in return when you make eligible purchases. For example, Chase has Chase Offers and American Express has its popular Amex Offers program. Capital One also has its own deals called Capital One Offers.

All these programs work similarly, although they only apply when you add an offer to your eligible card and meet purchase requirements that are laid out ahead of time. For example, Capital One Offers is now showing deals like 3 percent back at Walmart and 4 percent back at Kroger when you make an eligible purchase.

Just remember that limitations typically apply. For example, the Kroger offer lists that cash back cannot be earned on pickup orders, and that you cannot use this bonus offer for purchases of gift cards.

Never pay credit card interest

Lastly, you should know that the final way to fight inflation is to avoid paying the higher interest rates being charged on everything right now. This includes credit card interest rates and interest charged on other types of loans. You can save money by avoiding situations where you have to borrow money if you can and by paying more than the minimum on loans you have.

In the meantime, you’ll only want to use credit cards for the purpose of earning rewards if you have the discipline and ability to pay your credit card balance in full each month. After all, the average credit card interest rate right now is teetering around 20.51 percent, so it makes no sense to try to earn the average of 1 percent to 3 percent back in rewards while paying interest each month.

Also be aware that, if you do have credit card debt right now, you can quit paying sky-high interest rates for up to 21 months if you transfer the debt to a new balance transfer credit card. While an upfront balance transfer fee will apply, you may be able to save hundreds of dollars (or thousands) in interest payments depending on how much debt you have and the rate you’re currently paying.

The bottom line

Rising prices have definitely made it more difficult to get ahead, but a credit card can be a valuable tool when it comes to saving money or getting free stuff. Just remember that paying credit card interest will wipe out the benefits of using a credit card in almost every scenario, so you should always pay your balance in full each month.