Credit Cards for Investing: A Guide to Rewards and More

Credit cards can be a powerful tool for investing, offering rewards and benefits that can help you make the most of your money.

Some credit cards offer cash back rewards, which can be redeemed for a statement credit or direct deposit into your bank account, with some cards offering up to 5% cash back on certain purchases.

Others offer travel rewards, which can be redeemed for flights, hotel stays, and other travel expenses, with some cards offering points that can be transferred to popular airline and hotel loyalty programs.

If you're looking to invest in the stock market, some credit cards offer sign-up bonuses that can be redeemed for investment in a brokerage account, with some cards offering up to $500 in bonuses.

Some credit cards offer cashback rewards, which can be redeemed for a statement credit or deposited into a bank account. Cashback rewards can be used to invest in a TFSA account to grow your wealth.

Cashback rewards can be put toward future expenses, invested, or used to pay off debts. According to Goldman Sachs Bank, the average annual return of the S&P 500 has been about 9.2% for the past 140 years.

Points rewards, on the other hand, can be redeemed for travel discounts or used to invest in financial products. The exchange rate for points rewards varies by credit card program, with some offering a better rate than others.

Here's a comparison of the exchange rates for points rewards offered by different credit card programs:

Ultimately, the best rewards credit card for investing depends on your individual values and lifestyle.

The UpromiseMastercard is a great option for those looking to earn cash back on their purchases for college savings. This card offers 1.529% cash back on all purchases when linked to an eligible 529 plan, and 1.25% cash back otherwise.

This is a decent return, especially when you consider the sign-up bonus that comes with the card.

If you're looking to earn cash back for college savings, the UpromiseMastercard is worth considering, especially if you're already using a 529 plan.

Earning investment rewards can make a significant impact over time. For example, if you spend $2,000 in one month on a credit card that pays 2% cash back, you'll have $40 in rewards to deposit into your account.

To maximize your rewards, look for credit cards with tiered rewards structures that offer higher rewards on certain categories of spending. This way, you can spend more in the higher-paying categories and earn more rewards.

Some credit cards may also provide a bonus when you redeem cash-back rewards into an investment account, or bonuses for a minimum spend over a few months, which can then be redeemed for additional investing opportunities.

Here are some exchange rates for financial products offered by various credit card programs:

To qualify for an investment credit card, you typically need good to excellent credit, which is a good thing to know if you're planning to apply for one.

Qualifying also depends on your income, so if you're making a decent salary, you're more likely to get approved.

You'll also need to have an investment or brokerage account that qualifies for the rewards, which is a requirement for most investment credit cards.

Having too many credit cards open or carrying a lot of credit card debt can also hurt your chances of getting approved, so it's best to keep those numbers in check.

A few investment credit cards on the market right now include the Fidelity Rewards Visa Signature Card, TD Ameritrade Client Rewards Card, and the Bank of America Cash Rewards Credit Card, among others.

To earn rewards, you can use credit cards that pay a flat rate on all purchases or those with a tiered rewards structure, offering higher rewards on certain categories of spending.

Maximize the tiered rewards by spending more in the higher-paying categories. For example, if you have a credit card that pays 2% cash back on all purchases, spending $2,000 in one month will earn you $40 in rewards.

You can also invest without an investment credit card by redeeming cash-back credit card rewards as a check or bank account deposit, then making a contribution to any of your existing investment accounts.

Some credit cards offer a bonus when you redeem cash-back rewards into an investment account, or bonuses for a minimum spend over a few months, which can then be redeemed for additional investing opportunities.

The best cashback credit cards allow you to earn valuable rewards on a variety of purchases, such as the Chase Freedom Flex, Chase Freedom Unlimited, Blue Cash Preferred Card from American Express, and Citi Double Cash Card.

Here are some examples of rewards structures:

By understanding the rewards structure of your credit card and using it strategically, you can earn significant rewards that can be invested or used towards future expenses.

Be careful of overspending to meet minimum spend requirements, as this can lead to financial strain and negate the rewards benefits.

Credit card annual fees can range from $50 to $550, so it's essential to weigh the benefits against the costs.

Some credit cards have rotating categories for earning rewards, so be sure to use the right card for the right purchase to maximize your earnings.

If you're not using your rewards within a year, they may expire or be forfeited, so make a plan to redeem them on time.

Some credit card issuers have 5% or 5X rewards categories, which can be lucrative, but be aware of the spending limits and exclusions that often come with them.

You can increase the value of your Avion points by 20% by redeeming them for an RRSP contribution or financial products. This promotion is a great way to get more out of your points.

Some credit card offers come with redemption rates that can help you ease the burden of high mortgage payments. If you're facing a significant increase in mortgage payments with skyrocketing rates, you can turn to your points to help.

Don't miss out on the opportunity to boost your points value with a 20% bonus. This promotion ends on September 26, 2023, so be sure to act quickly.

Here are some ways to make the most of your points:

Investing in real estate can be a safe and lucrative option, especially if you're using credit card rewards to fund your investments. Real estate is always in demand, making it a stable investment choice.

Credit card rewards can be a significant source of funds for real estate investments, as Brandon Neth and his wife discovered when they used over $28,000 in credit card rewards to buy a multi-family investment property.

You can use credit card points to buy investment properties, making it easier to get started in real estate investing. This can be especially helpful if you're struggling to save up the necessary funds.

Airline and credit card rewards programs can change their policies at any moment, sometimes without notice, making travel redemptions a riskier bet. This is known as a devaluation, and it happens frequently.