Credit card rewards programs allow you to score free miles, cash back, or points to buy gift cards. Making use of credit card rewards is a smart move, as long as you can do so responsibly -- which means not charging more than you can pay off each month.

But while you benefit from participating in a credit card rewards program, the perks you'll get are nowhere near as valuable as the benefits that come from saving for retirement.

Despite this undeniable fact, more Americans are enrolled in at least one credit card rewards program than are enrolled in any kind of retirement plan. In fact, a recent survey from Value Penguin found that while 61% of U.S. households are enrolled in a credit card rewards program, just 58% of American households use any kind of retirement savings product. 

Bag full of hundred-dollar bills.

Image source: Getty Images.

Retirement savings products are more valuable than credit card rewards

It should go without saying that investing for retirement is more important than earning miles for free trips. After all, you don't have to take that awesome vacation, but you do need to retire some day and be able to support yourself. 

Saving for retirement is not only more important to your future, but you can also get more essentially "free" money by participating in a retirement program than you earn from even the most generous credit card rewards program. 

In 2018, you can contribute up to $5,500 to a traditional IRA -- or $6,500 if you're over 50 -- and can take a tax deduction for your contribution (provided you meet income limits). If you're in the 22% tax bracket and contribute $5,500, you get a tax break of $1,210. That's $1,210 in free money from the government, or a $1,210 "reward" for investing in your future. If using a credit card providing 2% cash back, you'd need to spend $60,500 to get $1,210 in rewards in a year. 

If you invest in a 401(k) at work and your employer provides matching funds, the employer match is also worth much more than you'd get in credit card rewards. Say you contributed $2,500 to a 401(k) and your employer matched that contribution dollar-for-dollar. Your employer would give you $2,500 in "free" money. You'd have to spend $125,000 on a credit card giving you 2% cash back to get that much. 

And, of course, the money you put into a 401(k) or an IRA grows if you invest it. A $5,500 contribution to an IRA at age 30 would turn into more than $58,000 by age 65, assuming a 7% return. Miles from a credit card rewards program you earn this year won't even be around by the time you're 65.

How to start participating in a retirement savings program 

The good news is, participating in a retirement savings program is easy. If you have access to a 401(k) or 403(b) at work, tell human resources you want to sign up and start making automatic contributions. If you don't have the option to contribute to a 401(k) or 403(b), open an IRA at any brokerage firm.

Either through HR or through your bank or broker, set up automatic contributions to your retirement account on payday so money transfers to your retirement account before you get a chance to spend it.

You should ideally save at least 15% of income, but if you can't, start with saving enough to get the employer match -- or even save just 2% of income and work up from there. If you make $50,000, 2% is $1,000 a year -- and for less than $40 per check if paid biweekly, you could end up with a nest egg of more than $160,000 at 67 if you start at 30 and keep your contribution the same through your whole career.

Getting started with retirement savings is just as simple as signing up for a credit card rewards program -- and perhaps even simpler, because you don't have to shop around for the right card or keep track of when miles expire. Yet the payoff is much bigger, so reward yourself today by starting to invest in your future.