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Use Credit Card Rewards to Boost Your Savings

Credit Card Basics, Credit Cards
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Use Credit Card Rewards to Boost Your Savings

If you think credit card rewards can only be counted in miles and points, it’s time to think again. By picking the right cash-back card and funneling rewards into your savings or investment account, you can build your nest egg as you do your day-to-day spending.

In observance of America Saves Week, the Nerds have picked the top credit cards for savers:

Best overall: Fidelity® Rewards Visa Signature® Card

If you do your saving or investing with Fidelity, the Fidelity® Rewards Visa Signature® Card will pump up your balance fast. With it, you’ll earn an unlimited 2% cash back on all your spending, which can be directly deposited into the Fidelity account of your choice. Eligible accounts include brokerage and retirement accounts, so you could be saving for a richer future every time you swipe.

Your annual fee is $0 to keep your account open, so you won’t have to worry about yet another expense cutting into your savings.

When it comes to overall value, the Fidelity® Rewards Visa Signature® Card card is tough to beat.

» MORE: Fidelity’s shift from Amex to Visa is a plus for cardholders

Best for 5% cash back: Chase Freedom®

Earning 5% cash back with your credit card may help you get to your savings goal lickety-split. The Chase Freedom® is a good option: You’ll earn 5% cash back in rotating quarterly bonus categories, up to $1,500 spent per quarter. You’ll also get unlimited 1% cash back on all other purchases.

In recent years, the Chase Freedom® has included restaurants, gas stations and grocery stores among its 5% categories. This makes it easy for nearly every spender saver to cash in.

You have several choices when it comes time to redeem rewards. As a saver, you’ll probably find the option to get a direct cash deposit into your bank account most convenient.

For a quick infusion into your savings, the Chase Freedom® comes with a sign-up bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening. This card’s annual fee is $0, making it a thrifty (and lucrative) choice.

» MORE: Why nearly every purchase should be on a credit card

Best for unlimited cash back: Citi® Double Cash Card – 18 month BT offer

If the Fidelity® Rewards Visa Signature® Card caught your eye but you don’t have a Fidelity account, the Citi® Double Cash Card – 18 month BT offer might be a good fit. It offers 1% cash back when you make your purchases and an additional 1% cash back when you pay them off. There’s no limit to the rewards you can earn, so indirectly, you’ll be saving every time you spend.

Like the Nerds’ other top picks, the Citi® Double Cash Card – 18 month BT offer charges an annual fee of $0. One drawback is that you’ll have to get your cash back as a check if you plan to add it to your savings account; doing a direct deposit isn’t an option. It’s not quite as convenient as other cards, but making a stop at your bank is probably a small concern when you consider the benefits it offers.

Best for unlimited rewards and a signup bonus: Capital One® Quicksilver® Cash Rewards Credit Card

So the Chase Freedom® provides a sign-up bonus and the Citi® Double Cash Card – 18 month BT offer provides unlimited rewards – but what if you want both? With the Capital One® Quicksilver® Cash Rewards Credit Card, you’ll earn unlimited 1.5% cash back on all of your purchases. Your rewards never expire, and you can redeem them in any amount.

You’ll also score a sign-up bonus with the Capital One® Quicksilver® Cash Rewards Credit Card: One-time $100 cash bonus after you spend $500 on purchases within 3 months from account opening. Its annual fee is $0, and it charges no foreign transaction fees. Again, you’ll have to redeem your rewards in the form of a check to get them into your bank account. Hopefully, you’ll find that extra legwork worthwhile as you watch your savings grow.

» MORE: When it makes sense to pass up higher credit card rewards

Lindsay Konsko is a staff writer covering credit cards and consumer credit for NerdWallet. Follow her on Twitter @lkonsko and on Google+.