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Americans are leaving millions in free money on the table

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Here's how banks finance credit card rewards

Every year, millions of dollars in credit card rewards go unclaimed — money that could be covering travel, everyday expenses, or even cash back in your pocket. If you’re not redeeming those rewards, you’re leaving money on the table.

As someone who leverages credit card rewards, I was somewhat surprised by the recent Bankrate survey revealing that 25% of Americans didn’t redeem their rewards last year.

That represents big money. For example, in 2022, consumers using general-purpose credit cards from major issuers earned more than $40 billion in rewards, according to a 2024 Consumer Financial Protection Bureau report. “Issuers forfeit, expire, revoke, or otherwise take away hundreds of millions of dollars in earned rewards value each year,” the agency said.

With so much content from social media influencers to financial experts highlighting these benefits, the real issue isn’t just awareness; it’s execution. 

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Knowing about the reward programs is one thing, but implementing is what actually matters.  Like any other aspect of financial planning, without a strategy, these perks may go unclaimed.

Here are some key points for consumers to know.

Overlooked value of credit card rewards 

Many consumers sign up for credit cards without thoroughly reviewing the rewards structure and benefits. Financial institutions often bury perks in fine print, making them easy to overlook. Many people think of rewards as a “bonus” rather than a tangible financial asset that could offset expenses.

Unlocking hidden benefits

Beyond standard rewards, many credit cards often offer embedded perks such as travel insurance, purchase protection and exclusive event access. These benefits offer cardholders added security and savings beyond traditional points or cashback. 

Understanding which card offers which benefit can help maximize the value of your credit card and prevent you from leaving money on the table.

My family’s real-life success story

I want to share a personal experience to show how easily overlooked credit card perks can make a real difference.

Several years ago, my son received an iPad as a Hanukkah gift from his grandparents. A few days later, at his brother’s hockey game, he put it down for just a moment to celebrate a big win — and in an instant, it was gone. 

He was heartbroken, and my in-laws were frustrated, assuming it was gone for good. I encouraged them to check the benefits offered by the credit card they used to buy it.

After a call to the financial institution, they discovered the credit card they purchased the item with had purchase protection, which can reimburse you for recently purchased items that are stolen or damaged.

Thanks to that, the cost of the iPad would be reimbursed to them after they submitted some paperwork. Within weeks, they got their money back, allowing them to replace the item. It was a great reminder that so many people are unaware of various perks.

Knowing what your credit card offers can turn an unexpected loss into a valuable lesson and soften the financial impact.

Consumer takeaways

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  • Credit card perks aren’t just about points and cashback — they offer hidden protections that can save consumers thousands.
  • Ignorance is costly. If you’re not using your perks, you’re effectively giving money back to the financial institution; especially if you have a credit with a yearly fee. 
  • If a newly purchased item is lost or stolen or if an expensive item breaks after the warranty expires don’t assume you are out the money. If you paid with a credit card, reach out to your financial institution to check for possible coverage via embedded purchase protection and extended warranties.
  • If you run into an issue on vacation — such as a delayed flight, lost luggage, or canceled reservation — and you booked the trip on a credit card, call the issuer. You may be able to get reimbursement from embedded travel insurance that will cover your losses or unexpected expenses. 
  • If you’re concerned about accumulating a balance you can’t pay in full at the end of the month, consider making weekly payments or paying off large purchases immediately. This approach allows you to leverage the benefits, protections and rewards of a credit card while maintaining the discipline many find in using a debit card.

— By Lawrence D. Sprung, a certified financial planner and founder/wealth advisor at Mitlin Financial Inc.

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I bonds investments and Trump’s tariff policy: What to know

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As investors worry about future inflation amid President Donald Trump‘s tariff policy, some experts say assets like Series I bonds could help hedge against rising prices.  

Currently, newly purchased I bonds pay 3.98% annual interest through October 31, which is up from the 3.11% yield offered the previous six months. Tied to inflation, the I bond rate adjusts twice yearly in part based on the consumer price index.

Certified financial planner Nathan Sebesta, owner of Access Wealth Strategies in Artesia, New Mexico, said there’s been a “noticeable uptick” in client interest for assets like I bonds and Treasury inflation-protected securities

“While inflation has moderated, the memory of recent spikes is still fresh, and tariff talk reignites those concerns,” he said.

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I bonds can be a ‘sound strategy’

As of May 7, the top 1% average high-yield savings accounts currently pay 4.23%, while the best one-year CDs offer 4.78%, according to DepositAccounts. Meanwhile, Treasury bills still offer yields above 4%.

Of course, these could change, depending on future moves from the Federal Reserve.

If you’re worried about higher future inflation and considering I bonds, here are some key things to know.

How I bonds work

I bond rates combine a variable and fixed rate portion, which the Treasury adjusts every May and November.

The variable portion is based on inflation and stays the same for six months after your purchase date. By contrast, the fixed rate portion stays the same after buying. You can see the history of both parts here.

Currently, the variable portion is 2.86%, which could increase if future inflation rises. Meanwhile, the fixed portion is currently 1.10%, which could be “very attractive” for long-term investors, Ken Tumin, founder of DepositAccounts.com, recently told CNBC.

Before November 2023, I bonds hadn’t offered a fixed rate above 1% since November 2007, according to Treasury data.

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The downsides of I bonds

Despite the higher fixed rate and inflation protection, there are I bond downsides to consider, experts say.

You can’t access the money for at least one year after purchase, and there’s a three-month interest penalty if you tap the funds within five years. 

There are also purchase limits. You can buy I bonds online through TreasuryDirect, with a $10,000 per calendar year limit for individuals. However, there are ways to purchase more.

“There’s also the tax consequences,” Tsantes said.

I bond interest is subject to regular federal income taxes. You can defer taxes until redemption or report interest yearly.

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Key ways consumer loans are affected

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CNBC Fed Survey: Respondents confident Fed will cut interest rates this year

When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans quickly followed suit. Even though the central bank lowered its benchmark rate three times in 2024, those consumer rates are still elevated, and are mostly staying high, for now.

Five ways the Fed affects your wallet

1. Credit cards

Many credit cards have a variable rate, so there’s a direct connection to the Fed’s benchmark.

With a rate cut likely postponed until July, the average credit card annual percentage rate has stayed just over 20% this year, according to Bankrate — not far from 2024’s all-time high. Last year, banks raised credit card interest rates to record levels and some issuers said they are keeping those higher rates in place.

At the same time, “more people are carrying debt because of higher prices,” said Ted Rossman, senior industry analyst at Bankrate. Total credit card debt and average balances are also at record highs.

2. Mortgages

Prospective home buyers leave a property for sale during an Open House in a neighborhood in Clarksburg, Maryland.

Roberto Schmidt | AFP | Getty Images

Mortgage rates don’t directly track the Fed, but are largely tied to Treasury yields and the economy. As a result, uncertainty over tariffs and worries about a possible recession are dragging those rates down slightly.

The average rate for a 30-year, fixed-rate mortgage is 6.91% as of May 6, while the 15-year, fixed-rate is 6.22%, according to Mortgage News Daily. 

Mortgage rates “are showing signs of life after a slow couple of years,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. 

But for potential home buyers, that’s not enough of a decline to give the housing market a boost. “Many borrowers are reluctant to take on a loan at today’s rates, particularly if they currently have a loan at a significantly lower rate,” Raneri said.

3. Auto loans

Auto loan rates are tied to several factors, but the Fed is one of the most significant.

With the Fed’s benchmark holding steady, the average rate on a five-year new car loan was 7.1% in April, while the average auto loan rate for used cars is 10.9%, according to Edmunds. At the end of 2024, those rates were 6.6% and 10.8%, respectively.

With interest rates near historic highs and car prices rising — along with pressure from Trump’s 25% tariffs on imported vehicles — new-car shoppers are facing bigger monthly payments and an affordability crunch, according to Joseph Yoon, Edmunds’ consumer insights analyst.

“Consumers continue to face a challenging market, now with added uncertainty of the tariff impact on their next vehicle purchase,” Yoon said. “Prices and interest rates remain elevated, and there’s no fast or easy answer as to how the tariffs will affect inventory levels — and therefore pricing — as buyers try to make sense of an increasingly complex shopping journey.” 

4. Student loans

Federal student loan rates are fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.

Interest rates for the upcoming school year will be based in part on the May auction of the 10-year Treasury note, and are expected to drop slightly, according to higher education expert Mark Kantrowitz. Undergraduate students who took out direct federal student loans for the 2024-25 academic year are paying 6.53%, up from 5.50% in 2023-24.

Borrowers with existing federal student debt balances won’t see their rates change, adding to the other headwinds some now face along with fewer federal loan forgiveness options.

5. Savings

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

“Continued high interest rates are discouraging for those with debt but awesome for savers,” said Matt Schulz, chief credit analyst at LendingTree. 

Yields for CDs and high-yield savings accounts may not be as high as they were a year ago, but the Fed’s rate cut pause has left them well above the annual rate of inflation, Schulz said. Top-yielding online savings accounts currently pay 4.5%, on average, according to Bankrate.

“With all of the uncertainty in the economy right now, it makes sense for people to act now to lock in CD rates and take advantage of current high-yield savings account returns while they still can,” Schulz said.

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Student loan interest rates for 2025-26: Expert estimate

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Expected student loan interest rates for 2025-2026

The interest rate on federal direct undergraduate loans could be 6.39% in the 2025-2026 academic year, estimates Kantrowitz. The undergraduate rate for the 2024-2025 year is 6.53%.

At those new undergraduate rates, every $10,000 a family borrowed would lead to a $113 monthly student loan payment after graduation, assuming the student enrolled in a standard 10-year repayment plan. With interest, the borrower would repay $13,559.87 over that decade.

For graduate students, loans will likely come with an 7.94% interest rate, compared with the current 8.08%, Kantrowitz finds.

PLUS loans for graduate students and parents may have a 8.94% interest rate, a decrease from 9.08% now.

The government sets interest rates on its education loans once a year. The rates, which run from July 1 to June 30 of the following year, are based in part on the May auction of the 10-year Treasury note.

Kantrowitz based his calculations on the Treasury Department’s announced high yield rate on Tuesday of 4.34%.

Which borrowers face lower rates 

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