4 Ways to Combat Inflation With Credit Cards

Quick Answer

Credit cards offer rewards and other perks that can help you rack up cash back, miles and more. Other strong inflation-combating credit card offers include promotional APR periods and bonus points. In combination with a budget, these perks can help make a difference while you buy the things you need.

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Inflation hit 8.3% for the year ending September 2022. While that's down from the even higher inflation rates recorded earlier this year, it's still putting financial pressure on many households.

That pressure is especially strong at the grocery store and the gas pump. As it becomes more expensive to afford your necessities, finding ways to save cash on essentials is vital. Here are four ways that credit cards can help you combat inflation, plus how to maximize their benefits.

1. Use Targeted Cash Back Cards

Inflation impacts different areas of spending in different ways, with categories such as gasoline and food spending hit hardest. To combat inflation using credit cards, look to the areas where your costs have increased the most and seek cash back credit cards that offer the biggest rewards in those categories.

For example, you could use a gas rewards credit card to earn points at the pump or a grocery rewards credit card to earn cash back at the grocery store. Some cards offer an elevated rewards rate (3% is common) on grocery spending. That can lead to more money back in your pocket every time you make a trip to fill the fridge.

2. Maximize Flexible Rewards

You can use the same strategy to earn miles when you travel, or points on dining or other purchases. Consider a rewards credit card with flexible bonus cash back categories. A rotating rewards credit card offers the ability to earn cash back in a different category each month or quarter, which can come in handy.

Some credit cards allow you to earn 3% cash back or higher on purchases in whichever eligible category you spend the most in that month, which can help you lessen the impact of inflation for commonly purchased goods.

3. Get a Card With a Welcome Bonus

In addition to using rewards to save on your everyday spending, try strategically signing up for a credit card with an introductory bonus before a large, planned purchase.

For example, if you need to buy new home appliances, a cash back card with a big intro bonus could be a great way to earn some money back—and even better if it offers a 0% introductory APR to give you some time to pay off the purchase before interest kicks in. If you're planning a vacation, a travel card with a welcome bonus could help you earn a big points bonus on your airfare or lodging. Just be sure only to use the card to make purchases you would have made anyway instead of spending for the sake of rewards.

4. Take Advantage of a Balance Transfer Card

As interest rates rise during times of high inflation, your goal should be to pay down any high-interest debt you're carrying as quickly as possible while keeping the cost of interest as low as you can. One way to get out of debt faster is with a balance transfer card.

A balance transfer card allows you to roll another debt (or multiple credit card balances) onto the new card. You'll then be able to pay off the balance at a lower interest rate. Look for a balance transfer card with a 0% introductory APR. The promotional APR period typically lasts anywhere from six to 21 months, which gives you time to pay down the debt and save a lot on interest.

Keep in mind that balance transfer cards typically require you to have good credit to qualify. In addition, balance transfers usually come with a fee charged as a percentage of the transfer. Make sure that the money you'll save in interest makes this upfront fee worth the cost.

Spend With Intention—and Caution

Credit cards offer benefits that can help you combat inflation and get more out of your spending, but only when used responsibly alongside a budget. Avoid taking on a balance that you can't afford to repay before interest begins to accumulate. If you can't pay off the full balance each month, the interest charged will negate any cash back or rewards earned. And if you know that credit cards offer too much temptation to overspend, then it's best to find other ways to combat inflation.

Before you consider a new credit card, know your credit score. Qualifying for the most advantageous credit cards comes down to having a history of borrowing responsibly and making on-time payments. Check your credit score for free through Experian to see where you stand, and then learn about where your credit score falls on the creditworthiness spectrum to see how lenders are likely to view you—and what cards you'll qualify for.

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