How credit cards can help you fight inflation

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Inflation continues to eat up a big slice of your budget, including money for gas and food. In August 2022, the U.S. inflation rate stood at 8.2%, — a level not seen since the 1980s.

So, how can you fight sky-high inflation? There are several approaches you can adopt. Believe it or not, wise use of credit cards is one way you might be able to offset soaring costs for goods and services.

How can inflation-fighting credit cards help you?

Credit cards that provide rewards, points, miles and other benefits can potentially ease the impact of inflation. How? By offsetting high prices for goods and services.

“It may seem counterintuitive to say utilizing credit cards can help a person fight inflation, but credit cards can be a tool in your arsenal for financial health, if used appropriately,” says Jeremy Lark, senior manager of program performance and quality assurance at GreenPath Financial Wellness, a nonprofit debt counseling service.

While using credit cards for purchases can help put the squeeze on inflation, it’s important to remember that this is only the case if you pay off your credit card balances in full each month.

“You want to be in the habit of checking the due date and pay [the full balance] before the interest hits, or you are not saving money using the account,” says credit coach Jeanne Kelly.

When you carry a credit card balance from one month to the next, you typically rack up interest charges. These interest charges can wipe out any inflation-fighting gains you enjoyed by putting purchases on a credit card.

From 2018 to 2020, American credit card holders paid an estimated $120 billion per year in credit card interest and fees, according to the Consumer Financial Protection Bureau. That equates to about $1,000 a year per U.S. household.

“It’s important to remember that the best way to control the amount of interest you pay is to manage your credit cards responsibly, keep balances low or pay off the balance in full each month,” says Lark.

When should you avoid using credit cards?

It’s understandable that you’d want to turn to credit cards as inflation-fighting weapons, but this tactic can backfire in some situations, such as when:

• You’re unable to pay the entire balance on a credit card every month. When this happens, you normally end up with interest charges.
• You’ve accumulated too much credit card debt. The more of your available credit that you use, the more it can hurt your credit utilization ratio. This is the amount of revolving credit (such as credit cards) that is available to you compared with the amount you owe. Credit utilization makes up 30% of the widely used FICO credit score.
• You’re applying for an auto loan, a mortgage or another type of loan. Adding to your credit card balances when you’re trying to get a loan might lower your credit score. That, in turn, may mean you wind up paying a higher interest rate on the loan or your loan application is rejected.

So, if it makes sense for you to make purchases with credit cards, what are some of the best ones for combating inflation? Here are some cards to consider for gas, grocery and restaurant purchases.

Credit cards that can help save money on gas

• CardName – With the CardName, you earn 3X points at gas stations, as well as 3X points at grocery stores and restaurants and on air travel and hotel stays. Citi is a CardRatings advertiser.
• CardName – The CardName Card lets you receive 5% cash back in rotating quarterly categories such as gas, groceries and online purchases. The 5% cash back feature applies to as much as $1,500 in combined purchases per quarter and activation is required. Information related to Chase Freedom Flex^SM has been collected independently by CardRatings and was neither reviewed nor provided by the card issuer
• CardName – The CardName offers 5X points for purchases at gas and at electric vehicle charging stations.

Credit cards that can help save money on groceries

• CardName discontinued – The CardName offers an eye-popping 6% cash back on purchases at U.S. supermarkets. This applies to up to $6,000 per year spent at U.S. supermarkets. After that, the cash back rate drops to 1%. American Express is a CardRatings advertiser.
• CardName – With the CardName, you earn 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, $50 Annual Chase Travel Hotel Credit, plus more.
• CardName – The CardName stands out because it has no categories to enroll in and no caps on the amount of cash back you can collect. This card awards an unlimited 1% cash back on purchases, plus another 1% cash back (as long as you pay the minimum due on time). Citi is a CardRatings advertiser.

Credit cards that can help save money on dining out

• CardName – With the CardName, you can get some financial dessert when you eat out. The card offers unlimited 3% cash back on dining, entertainment, popular streaming services and at grocery stores (excluding superstores like Walmart and Target); unlimited 5% cash back on hotels and rental cars booked through Capital One Travel (terms apply); 8% cash back on Capital One Entertainment purchases; and 1% cash back on all other purchases.
• CardNamediscontinued – The CardName rewards you with 4X Membership Rewards® points for purchases at restaurants around the world, and 4X Membership Rewards® points for takeout and delivery purchases in the U.S. In addition, you can enroll in a program that awards $120 in annual dining credits when you use the card for purchases at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, Milk Bar and certain Shake Shack locations.
• CardName – The CardName serves up 4X points on restaurant dine-in, takeout and delivery meals. On top of that, you earn 2X points at grocery stores, grocery delivery services, streaming services, gas stations and electric vehicle charging stations (discount stores/supercenters and wholesale clubs excluded effective September 9, 2024), and 1X point on all other eligible purchases.

See Rates and Fees for the CardName; See Rates and Fees for the CardName