I’m a Banking Professional: Here’s How I Use My Bank Rewards Program To Grow My Wealth

Many financial institutions use rewards or loyalty programs to stand apart from the crowd and build lasting relationships with their customers. This has become increasingly necessary as more fintech companies — roughly 13,000 in the Americas alone — have come upon the scene.

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According to Open Loyalty (citing data from Collinson Group), 70% of consumers base at least part of their decision about which bank to use on the availability of personalized rewards programs. Around 61% of customers also feel it’s extremely or very important for their bank to have innovative ways of rewarding them for their loyalty.

Whether your bank offers rewards programs or not, you might be wondering just how useful they are and whether they can truly help you grow your wealth. In short, while they may not be the primary wealth-building strategy out there, they can certainly help.

GOBankingRates spoke with two banking professionals from PSECU (Pennsylvania State Employees Credit Union), Susan Steffy and Chris Rhine, about their experiences using their bank rewards programs to increase their savings. Here’s what they shared .

Using Cash-Back Rewards Programs

For Susan Steffy, community relationship manager at PSECU, it’s all about using the credit union’s cash-back rewards program in conjunction with other financial products to make more money.

“By utilizing the cash-back rewards program of one of our signature loans at PSECU, I’ve been able to open $4,000 in CDs,” she said. “By also keeping almost all ‘cash’ in the money market, interest is again increased. The $4,000 in CDs and the money market interest make just about another $500 per year. Money making money.”

Like PSECU, many other financial institutions also have their own cash-back rewards programs. For example, Axos Bank CashBack checking account comes with 0.50% to 1% cash back per eligible purchase — depending on the account balance. Other banks have their own cash-back rewards programs.

Used on their own, these cash-back rewards could put a few extra hundred dollars in your pocket. But when combined with another financial product, like a certificate of deposit (CD), you could see even more earnings over time.

Chris Rhine, regional membership development manager at PSECU, said he also uses the credit union’s cash-back rewards program to earn more. But in his case, it’s less about building wealth and more about having some extra spending money for when he needs — or wants — to use it.

“I take advantage of my 2% cash back credit card rewards,” he said. “I let the cash reward build up and then treat myself to something fun or use it to pay for something unexpected. It is not part of my wealth strategy per se.”

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Major Types of Bank Rewards Programs

If you want to capitalize on your savings or build wealth more quickly, cash-back programs can help. But they’re not the only option available through different financial institutions. Here are a few other major bank rewards programs and perks out there:

• Tiered reward programs: Some banks offer perks to long-term customers, particularly those who spend a certain amount each month. These sometimes come with direct cash rewards for eligible purchases, which can promote customer loyalty. Rewards may be based on engagement, spending and how long the customer has had the account.
• Customer loyalty programs: These often come with rewards or benefits meant to incentivize current customers to keep engaging with the company or stick with the bank in the long term. Common incentives include free ATM transactions, reward coupons and discounts at select retailers.
• Points-based reward programs: With these, it’s possible to accumulate loyalty points with each credit or debit card transaction. After a certain point, you can redeem points for specific types of rewards. Points may also be earned by engaging in certain actions, such as following the institution on social media.
• Signup or welcome bonuses: Some banks will have a signup bonus when you open an account. For example, Citibank has a $200 to $2,000 welcome bonus that’s based on how much you initially deposit into the account. These offers are generally only available to new customers or those who haven’t had an active account with the institution for a set period — like 365 days or more.
• Higher APYs: Certain types of accounts, specifically savings accounts, earn interest on the balance. Most institutions limit how much you can earn, but not all. Ally Bank, for example, offers 4.20% APY regardless of account balance. This means that the greater your balance is, the more you could earn each month.

Whether you use your bank’s cash-back program like Steffy and Rhine do, or your bank has different rewards programs, you could accrue some extra cash over time. If you combine several programs together and invest the earnings, you could rack up even more savings. Do this consistently over time, and you could end up with a pretty substantial amount — all because you took advantage of what was already there.

This article originally appeared on GOBankingRates.com : I’m a Banking Professional: Here’s How I Use My Bank Rewards Program To Grow My Wealth