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Credit card rewards can be a great way to pad your savings account, especially when you transfer them directly with no temptation to spend. Some credit card companies make it easy if you already have a savings account through their bank, while others require you to first withdraw the rewards as cash and deposit them yourself.
Here’s a look at your best options to boost your savings account balance, depending on where you bank.
Note: Remember that to save money with a credit card you should always pay your balance off in full each month. Carrying a large balance will quickly offset the rewards you earn so it’s important to use your card responsibly and only make purchases that you can afford to pay off immediately. As long as you do that, this can be a great way to save some additional cash each month.
Bank of America Customers
If you have an existing Bank of America savings account, Bank of America offers a few rewards credit cards that can be linked to transfer your rewards easily. chances are your rewards card allows you to transfer your rewards easily. The BankAmericard Cash Rewards card, for example, let’s you deposit rewards directly into your savings account, pay down your mortgage, receive a check in the mail or get a statement credit.
Wells Fargo Customers
With the Wells Fargo Cash Back Platinum card, you can redeem your rewards in many ways, including automatic deposits into your Wells Fargo savings account. For the first 6 months, you get 3% cash back on all drugstore, grocery and gas purchases and 1% on everything else. After the introductory period, you still earn 1% cash back on all purchases.
Along with depositing your rewards directly into your savings account, you can choose to have them applied to the principal of a personal loan you have through the bank.
Chase has one of the best rewards programs in the industry, provided you have other Chase products like a checking account. If you have a Chase checking account and the Chase Freedom card, you’ll get a 10% on all purchases, plus an extra 10 points for every transaction.
This means a purchase of $1 earns you 12 points, while a $100 purchase nets you 120 points. You can have your rewards points automatically deposited into your Chase checking (and from there transferred to savings) with a value of $0.01 per point.
Citibank customers can boost their savings accounts with a Citi ThankYou Rewards card. If you link your credit card with your checking account and use other services and products like Bill Pay, Direct Deposit and Auto Save, you can earn even higher rewards. Unfortunately, your rewards can’t be transferred directly to your checking or savings account and you only get cash back with a value of .62 cents per point.
Saving for Education
If you’re trying to save up money in a 529 account for your child’s education, some credit cards offer a rewards program that may be tied to a 529 account. The Fidelity Investment Rewards Visa is a good choice, which lets you deposit rewards into any eligible Fidelity account, including 529 accounts and IRAs. There is no annual fee and no limits on your rewards. You earn 1.5 to 2 points per dollar on purchases and every 5,000 points is converted into a $50 deposit. Upromise also offers two rewards credit cards to help you save money for college, both with no annual fee and bonus rewards if you shop at a company that participates in Upromise.
If Your Bank Doesn’t Offer a Rewards Card…
If your bank doesn’t have a rewards credit card, chances are you can’t set up any rewards to transfer directly to your savings (or checking) account. Instead, look for a cash back credit card that has no annual fee and offers cash redemption, not statement credit, to really fuel your savings account. You’ll be responsible for transferring the rewards cash to your savings, so make sure you link your checking and savings together to save time.