Credit card rewards take the sting out of a starter budget


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FILE - In this Tuesday, Dec. 31, 2013, file photo, a paddleboarder looks our over the Pacific Ocean as the sun sets off of Waikiki Beach, in Honolulu. When you’re just starting out, credit card rewards offer some much-needed financial breathing room and opportunities to travel farther than you thought possible. (AP Photo/Carolyn Kaster, File)

As credit card rewards rates and bonuses skyrocket in value, they've fattened the wallets of many creditworthy consumers. But one group especially can benefit from these ever-growing offers: millennials.

For folks in their 20s to mid-30s, credit card rewards can trim expenses and make travel affordable at a time when income often flows to other financial priorities.

"Without miles and points, I probably wouldn't have gone on half the (trips) I've gone on," says Deric Poldberg, 26, of Carter Lake, Iowa, who works as a banker. As the founder of the award travel blog, he often uses rewards to book ambitious international getaways.

It's generally easy to come out ahead on credit card reward offers, as Poldberg has, if you can manage your spending well and pay down your balances every month to avoid interest. If that's doable, those rewards are well worth your attention.


Starting out on your own is often a financial juggling act. Suddenly, your paycheck might be going to student loans, rent and an emergency fund, leaving little left over. Rewards earned on credit cards offer some financial breathing room, and they don't necessarily have to cost you.

Sign-up bonuses earned on cards with no annual fees, for example, are often worth $150 or $200. If those rewards come in the form of cash back, that's enough to cover a few date nights, a week of groceries or a new piece of furniture. You'll also earn ongoing rewards when using a rewards card — whether it's a cash-back or travel card — often getting about 1 to 2 percent back on each purchase.

"Just having that extra . designated amount of money that allows you to do things you normally wouldn't do, I think, is really beneficial," says Britany Ederveen, 27, a high school English teacher in Parker, Colorado , who blogs about travel and other topics. She carries a card that earns flexible rewards redeemable for travel, among other things.


For many millennials, travel is a part of life, and rewards earned on a credit card can trim expenses significantly. Ederveen, for example, recently used her credit card points to cover hotel stays when visiting Germany and Austria with her boyfriend, making the trip much more affordable.

Points and miles can even come in handy for those who don't go on big trips. Some flexible travel rewards also cover rides on Uber or Lyft, campground fees, train and bus fares and other travel-related expenses. Plus, most travel cards with annual fees also tend to come with large bonuses, often worth $500 or more when redeemed for travel.

Blogger Matt Kepnes of Austin, Texas, began traveling internationally at age 23. But it wasn't until a few years later that he found out how useful credit card rewards could be. On his blog, Nomadic Matt, he writes about his travels and explains how to benefit from these rewards programs .

"I realized, 'I've been flying around the world and not collecting any points and miles. I'm a huge idiot,'" says Kepnes, now 36. "So I really started investigating the points and miles system." He recommends putting everyday spending on a rewards credit card if you can qualify for one.


You might not have a plump savings account as a millennial, but time is often on your side. And in the world of credit card rewards, that can be an enormous advantage, especially for young people willing to jump through a few hoops .

"When you're young, you don't have as many obligations. You're a little more apt to take a trip over a long weekend to another country," says Poldberg. In 2016, he and his girlfriend did just that when they traveled to Paris with rewards , after snagging an outstanding deal on the flight.

Even for millennials with less flexible schedules, there are opportunities to score extra rewards. If you shop online and don't mind trying out different retailers, you could earn more rewards by shopping through credit card bonus malls. Or you could maximize a rotating rewards category on a card by timing a large purchase for the quarter when you'll earn the most cash back.

It's usually not quick or easy to squeeze the most value possible out of credit card rewards. But for young folks who have the flexibility and willingness to experiment, such efforts can pay off.


This article originally appeared on the personal finance website NerdWallet. Claire Tsosie is a writer at NerdWallet. Email: Twitter: @ideclaire7.


NerdWallet: The secret to optimizing credit card rewards? Be disloyal

Nomadic Matt: How I earn 1 million frequent flier miles each year

Passenger Poldberg: How I booked my first award ticket to Paris,2,2016

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