Updated
Earning credit card rewards is great. Getting rewarded for your everyday spending helps make purchases cheaper -- as long as you don't carry a balance on your card and get stuck paying high interest rates.
Since I know how valuable credit card rewards can be, I charge just about every purchase I can -- which means I earn a lot of rewards every month. And I've managed to more than double the value of those rewards with one simple move. Here's what it is.
How I make the absolute most of credit card rewards
To get the most value from my credit card rewards, I signed up for a cash back credit card that deposits the money directly into my investment account. That means for every dollar I spend, a small deposit is made in a brokerage account that I can use to buy investments.
I also wanted a safe, no-brainer way to make the cash grow, so I invested in S&P 500 index funds, which are funds that track the performance of 500 of the largest U.S. companies. Index funds come with low fees, and there's not much research required.
Over time, the S&P 500 has consistently produced around a 10% average annual return. Now, this doesn't mean I make 10% on my money every year. Some years, my investments underperform this expectation, and in other years, they overperform. But it does mean that over the long term, this is about what I can expect my deposited cash back to produce.
Since the money I'm investing comes from cash back rewards, it isn't reducing my take-home income in any way. That makes it really easy to just leave the account alone and let the invested funds grow. And by doing this, I've more than doubled the value of my cash back rewards over time. In fact, some of the rewards I invested a decade ago are worth more than twice the amount they were valued at when they made it into my account.
Since I'm consistently investing money each month when I get my cash back rewards, I also benefit from the fact that I sometimes get to buy my S&P 500 shares at a discounted price when the market is in a downturn. And because my cash back is spread around so many large U.S. companies, the risk of losing my rewards is minimal.
Learn more: How Do Cash Back Credit Cards Work?
Here are a few cash back cards we love that could be worth a look, especially if you're interested in putting your rewards to work for you.
As of Nov. 27, 2023
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| Wells Fargo Active Cash® Card | Capital One QuicksilverOne Cash Rewards Credit Card |
U.S. Bank Cash+® Visa Signature® Card |
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Rating image, 5.00 out of 5 stars.
5.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
Rating image, 4.00 out of 5 stars.
4.00/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
Rating image, 4.50 out of 5 stars.
4.50/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
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Apply Now for Capital One QuicksilverOne Cash Rewards Credit Card
On Capital One's Secure Website. |
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Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Fair (300-669)
Fair (300-669) |
Credit Rating Requirement:
Falling within this credit range does not guarantee approval by the issuer. An application must be submitted to the issuer for a potential approval decision. There are different types of credit scores and creditors use a variety of credit scores to make lending decisions.
Recommended Credit Score required for this offer is: Good/Excellent (670-850)
Good/Excellent (670-850) |
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Welcome Offer: Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months. $200 cash rewards |
Welcome Offer: Cash Back Cash Back |
Welcome Offer: Earn a $200 bonus after spending $1,000 in eligible purchases within the first 120 days of account opening. $200 |
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Rewards Program: Earn unlimited 2% cash rewards on purchases. 2% cash rewards |
Rewards Program: Earn unlimited 1.5% cash back on every purchase, every day. Earn unlimited 5% cash back on hotels and rental cars booked through Capital One Travel, where you'll get Capital One's best prices on thousands of trip options. Terms apply. 1.5%-5% cash back |
Rewards Program: 5% cash back back on up to $2,000 of quarterly spending in two categories of choice and for travel booked directly in U.S. Bank's Rewards Travel Center, unlimited 2% back in one "everyday" category of choice, 1% back on other purchases 1% - 5% back |
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Intro APR: 0% intro APR for 15 months from account opening on purchases and qualifying balance transfers Purchases: 0% intro APR, 15 months from account opening Balance Transfers: 0% intro APR, 15 months from account opening on qualifying balance transfers |
Intro APR: Purchases: N/A Balance Transfers: N/A |
Intro APR: 0% on purchases and balance transfers for the first 15 billing cycles on purchases billing cycles, and after that 19.49% - 29.74% (Variable). Purchases: 0%, 15 billing cycles on purchases Balance Transfers: 0%, 15 billing cycles |
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Regular APR: 20.24%, 25.24%, or 29.99% Variable APR |
Regular APR: 30.74% (Variable) |
Regular APR: 19.49% - 29.74% (Variable) |
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Annual Fee: N/A $0 |
Annual Fee: $39 |
Annual Fee: $0 |
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Apply Now for Capital One QuicksilverOne Cash Rewards Credit Card
On Capital One's Secure Website. |
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Give investing your rewards a try
Now, this approach works for me because I don't need to use my credit card rewards for other things, such as funding vacations (I have a separate savings account for that). And I like the fact that every time I'm spending, I'm doing a little bit to increase my net worth.
If you aren't counting on your cash back for other purposes, consider getting a credit card that lets you deposit that money into a brokerage account so you can also turn your rewards into a hefty sum over time.
Still have questions?
Some other questions we've answered:
Our Credit Cards Expert
Christy Bieber is a full-time personal finance and legal writer with more than a decade of experience. She has a JD from UCLA as well as a degree in English, Media and Communications with a Certificate in Business Management from the University of Rochester. In addition to writing for The Ascent and The Motley Fool, her work has also been featured regularly on MSN Money, CNBC, and USA Today. She also ghost writes textbooks, serves as a subject matter expert for online course design, and is a former college instructor.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has positions in Visa. The Motley Fool has positions in and recommends Target, U.S. Bancorp, Uber Technologies, and Visa. The Motley Fool has a disclosure policy.