Navigating the Shifting Mortgage Landscape with Rewards

Recent reports indicate a slight uptick in mortgage rates, a trend that can significantly impact household budgets. While rates remain historically reasonable, even a small increase can translate to hundreds or thousands of dollars more over the life of a loan. At RewardSmart, we want to help you minimize the impact of these rising costs by strategically using your credit card rewards.

Turning Home Expenses into Reward Opportunities

Your home is likely one of your biggest expenses. Fortunately, many housing-related costs can be put on a credit card, allowing you to rack up valuable rewards points, miles, or cash back. Consider these opportunities:

  • Home Improvement Projects: Planning a renovation? Use a credit card that offers bonus rewards on home improvement store purchases. Cards like the Chase Freedom Flex (rotating quarterly categories) or the Citi Custom Cash (5% back on your top spending category each billing cycle, up to $500 spent) are excellent choices for maximizing returns on materials and supplies. Remember to pay off the balance in full each month to avoid interest charges.
  • Recurring Bills: Automate your utility payments (electricity, gas, water, internet) to your credit card. Even small, consistent rewards can add up over time. Opt for a general cash-back card like the Wells Fargo Active Cash card (2% cash back on everything) or a card with bonus rewards on utilities.
  • Furnishing and Decor: New furniture, rugs, or artwork? Many retailers offer exclusive discounts or bonus rewards when you use their co-branded credit card. Weigh the value of these perks against a general rewards card to determine the best option.

Refinancing Considerations and Rewards

If you're considering refinancing to take advantage of potentially lower rates in the future, be aware that some lenders may allow you to pay closing costs with a credit card. This is a significant opportunity to earn a large number of rewards points. However, carefully evaluate the fees associated with using a credit card for closing costs against the rewards earned. A balance transfer card with a 0% introductory APR could be beneficial if you can pay off the balance before the promotional period ends.

Example: Paying $5,000 in closing costs with a card that earns 2% cash back would net you $100. This could offset other rising home-related expenses.

Monitor Spending and Optimize Redemptions

With rising mortgage rates potentially impacting your budget, it's more important than ever to track your spending and redeem your rewards strategically. Use the RewardSmart app to monitor your credit card activity, identify opportunities to maximize rewards, and choose the most valuable redemption options. Consider using your rewards to offset travel costs, purchase gift cards for everyday expenses, or even reduce your credit card balance directly.

Key Takeaway

While rising mortgage rates may present a financial challenge, strategically using your credit card rewards can help you offset increased costs and maintain your financial stability. By focusing on home-related expenses and optimizing your spending habits, you can turn everyday purchases into valuable rewards that benefit your bottom line.