Credit Cards

I racked up $750 in credit card rewards last year. This is what I’m doing with that money

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I’m sitting on a pile of cash rewards. And I have no plans to salvage any of that.

Key points

  • Using the same credit card can often result in a substantial cash back reward.
  • While it might make sense to use credit card rewards to improve your financial situation, I intend to have fun with mine for a big reason.

Although I have several credit card accounts open, there is one card in particular that I consider my preferred card. It’s the card I pull out when I buy food at the supermarket, pay for my kids’ extracurricular activities, or collect travel plans.

This card offers a pretty generous cash back program. And putting most of my purchases on the same card makes it easy for me to track my spending and make sure I don’t overdo it.

Last year, I accumulated approximately $750 in cash on the card. Now, some credit cards allow you to cash out your rewards month after month or when a certain minimum is reached, but my card works a little differently. Instead of collecting rewards throughout the year, you accumulate rewards and then earn a certificate once a year that you can redeem for cash.

That is precisely what I did last year. And since $750 is not a small amount of money, part of me initially thought maybe I should put some in my savings account.

Instead, I am using every dollar of that money for entertainment purposes. This is why.

It’s free money and my savings are on the right track

While there are certainly aspects of my finances that could use some work, for the most part, I’m in pretty good shape when it comes to things like savings and debt. I have a full emergency fund with enough money to cover about a year’s living expenses (which is actually more than most people need, but I have my reasons for being wrong and having more cash in the bank). I also don’t have any debt other than my mortgage, and that’s considered a healthy type of debt.

I’ve also been maxing out contributions to my retirement plan and keeping up with my bills without dipping into savings to cover expenses. All in all, while I could deposit some of my cash reward in the bank or add it to my brokerage account and invest it, I don’t feel compelled to do so.

The way I see it, I’m already reaching my personal financial goals. And since that $750 cash really is free money, I think I have a right to enjoy it.

To be clear, I do not intend to spend it only on myself. My plan, rather, is to spend that money on a modest weekend getaway with my family or on some fun day trips and activities with my husband and kids. The point, though, is that I’m using my cash back for leisure purposes because I feel like I have that wiggle room.

What should you do with your credit card refund?

If you’re behind on your emergency savings, have credit card debt, or are behind on specific financial goals, then the next time you hit a windfall, whether it’s a bunch of cash from your credit card or something else, you should consider using to shore up your financial situation. But if you’re doing well financially, why not withdraw the cash from your credit card and use it to enjoy life a little more?

Having that extra money on hand allows me to enjoy myself a little more without feeling guilty. And there’s no reason why you shouldn’t take a similar approach if you’re on a comparable boat.

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