Here's How I Plan to Spend My Credit Card Reward Points From 2023

The nice thing about using credit cards is that you get to rack up reward points on the items you're buying. Those rewards can then be redeemed for things like cash back or other perks.

Meanwhile, the credit card I use more often than any other is the Costco Anywhere Visa® Card by Citi. And there are a few things I love about this card.

First, the card gives 4% back on gas and EV charging. I fill up my car pretty often these days thanks to my kids' busy activity schedule. I also get 3% back at restaurants and on travel purchases. 

Plus, the card gives me 2% back on everything I buy at Costco. And when you shop at Costco as often as I do, those points can really add up.

So far this year, I've earned more than $1,000 in cash back on that credit card, and that's before accounting for any of my holiday shopping, which tends to give my reward-earning activity a boost. So I won't be surprised if I end up with over $1,500 in cash back by the end of the year. 

Because that's such a sizable sum, I'm planning to use that cash back to fund a 2024 vacation. But it's the nature of how I receive my rewards from my Costco Anywhere Visa® Card by Citi that makes things like that possible.

When you're not tempted to spend your cash back every month

Most credit cards give you access to your rewards or cash back every month. The Costco Anywhere Visa® Card by Citi doesn't. Instead, you get a lump sum cash back distribution once a year, often in the form of a Costco certificate. 

I typically take that certificate to Costco and redeem it for cash. I then stick that cash in my bank account until I need to pull it out.

For some people, the fact that the Costco Anywhere Visa® Card by Citi only issues cash back once a year may be a negative. But for me, it's great. It helps me stay disciplined and focused on my goal.

When you get $100 cash back every month, you may be tempted to spend that money right away. While it's a lot in its own right, it's not the most massive sum. But you'd probably be less likely to go out and blow $1,200 in one fell swoop, right?

That's the beauty of the Costco Anywhere Visa® Card by Citi. Because my rewards only come in once a year, there's no option or temptation to spend that money month after month. As such, I'm able to reserve it for a larger expense. 

A good way to force yourself to save

I'm able to use my credit card reward points to take a vacation because I have a fully loaded emergency fund and am doing reasonably well on my long-term savings goals. But data from SecureSave recently found that 63% of Americans don't have enough savings to cover a $500 expense.

If you're in that boat, you may want to get the Costco Anywhere Visa® Card by Citi or a similar credit card to use for everyday purchases that only gives out your rewards once a year. That way, the cash back you get might serve as a form of forced savings. 

Let's say you rack up $80 a month in rewards based on the everyday expenses you charge. You won't have the option to cash out your $80 a month -- you'll have to wait 12 months. By then, you'll be looking at almost $1,000. Stick that money into a savings account, and you've suddenly improved your financial picture quite a lot.

Of course, if you're doing fine financially, you could always do what I do and earmark your credit card rewards for a large purchase or splurge. But you may want to set yourself up with a credit card that removes the temptation to spend that money month after month.