Ways to Redeem Credit Card Rewards

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If you pay your balance every month, you’re financially ready to make your credit card use earn flights, money, and more. After all, if you’re budgeting and spending responsibly, why not get cash back, plane tickets or overnight stays for your efforts?

There are several ways to earn and redeem rewards. In simple terms, cash-back cards earn you money when you spend money. Travel-based cards offer points or miles you can redeem for airline tickets, resort stays, hotel destinations, and more. And some cards offer both types of rewards, as well as merchandise and other options. 

And of course, it’s always a good idea to redeem rewards before your points expire.

Earning rewards and redeeming rewards are two different beasts. It can be easy to earn rewards, but there may be trouble when you want to redeem them. You may find that your rewards aren’t worth as much as you spent on the card’s fees or interest, for example, or that blackout dates interfere with your travel plans. Check the fine print and remember that a flexible attitude (and travel plans) can make or break a redemption.

Cash Back 

For no-fuss rewards on your monthly spending, you may want to redeem rewards for cash back if that’s an option. With most cards, one point is generally equivalent to one cent. So if you redeem 100 points, you'll get $1 back.

Applying the points to your statement (a statement credit) is the easiest option, but if you don’t use the card often, you might prefer a mailed check. Typically, in this case, a set minimum is required. For example, your account must reach a 2,500-point minimum to receive a $25 check. 

While a one-cent return doesn’t sound like much, a year’s spending usually sends a decent amount of cash boomeranging back—perhaps enough for a dinner out or even an extra mortgage payment.

Flights

With co-branded airline cards, a small percentage of your spending turns into points or miles that go to your frequent-flyer account after you pay your bill. Redeem miles for a flight on the airline or one of its partners. Or you could them to upgrade to first class, or put toward a money-and-miles mix to reduce flight costs.

You’ll do this through the airline’s website. Once you log in to your frequent flyer account, search for the flight you’d like, then you will see an option that says, “pay with points” or something similar that will tell you how many miles that flight requires. You’ll usually need to pay money for taxes on the flight, and any other fees.

Before redeeming miles, you’ll want to compare the dollar value of the flight, with the miles you’re “spending” to ensure you’re getting a good deal—around 1 cent/mile. If you won’t get that much value, consider whether you’d rather pay for that flight with cash and save your miles for a better cash-in deal.

With general travel cards, you may have one or more of these options:

  • Pay for a flight with your card and use points to get reimbursed for that purchase
  • Book your flight with points through the credit card’s travel portal
  • Transfer points to an airline and use the miles in the way described above through the airline website

With the best programs, you’ll be able to transfer points to an airline program at a 1:1 ratio, with 1 point equivalent to 1 frequent flyer mile. Sometimes, you can get the best deals by using this option. That’s because you may be able to find a flight that costs significantly more in dollars than it does in miles.

Some cardholders earn more in reward transfers, or find their miles go further when booking trips through the card’s travel-rewards portal. For example, with the Chase Sapphire Preferred, your points are worth 1.25 cents each when redeemed through the Ultimate Rewards portal. The Chase Sapphire Reserve’s points are worth even more—1.5 cents each when redeemed that way.

When exchanging points or miles for flights, you’ll possibly notice some flights require more miles on popular travel days (weekends), on heavy-traffic dates (holidays), or that there are restricted and/or blackout dates where you cannot use your miles or points for a seat. Flexibility helps when redeeming miles or points for flights. 

Hotel Stays

When you’re traveling, overnight stays can add up—and can be more expensive than flights. Many savvy card-using travelers prefer to redeem points for accommodations, whether at a luxury resort or family-friendly hotel.  

Hotel-stay redemptions are of course offered through branded hotel cards. Points can be used to cover part or all of the night’s bill. 

General travel cards also allow you to redeem points for hotel stays. This may happen in one of three ways: 

  • Book free rooms through the card portal
  • Get a statement credit, after the hotel stays occur
  • Transfer points to a hotel loyalty program 

Either kind of card may allow you to redeem points for upgrades or extra charges such as meals or spa appointments during your stays. 

If you really want to dig into the value you earn for every dollar you spend on different cards, check out our reviews of popular hotel and travel cards. You’ll find links to reviews of the top hotel cards here. And links to reviews of the top travel rewards cards here. The reviews include how much we value each card’s points.

If you’re dedicated to a hotel brand for work or pleasure and you want to earn more stays within that chain, it’s worth it to stick with the chain’s co-branded hotel card.. 

Other Travel

Some credit cards and frequent flyer programs present options to pick up free rental cars or cruises, rail travel, or refund your spending on rental cars with a statement credit. Others let you book using points using the card’s travel portal. In general, you’ll get 1 cent per point for these options, but may get more. 

Some package deals offer weeklong stays, bundling hotel and airfare for one redemption. While these generally require large numbers of points or miles, there may be redemption bonuses for combo packages. 

Special Experiences

Some cards let you redeem points for event tickets or special experiences, such as VIP concert tickets, seats at sporting events, masterclass packages, and more. 

Merchandise and Subscriptions

Points can be used to buy merchandise, subscriptions, ride-shares, online restaurant ordering and other items through the rewards system or an online portal. While these options might not be ideal, if you’re not planning on a trip and your points are about to expire, a travel-magazine subscription might be just the thing. 

Online Shopping and Gift Cards

Some cards partner with retailers, like Amazon.com or Apple, and allow you to pay for merchandise with points; check to ensure that your points are worth at least 1 cent. 

Some credit cards let redeem rewards for gift cards through the rewards program. Check redemption rates, however, as sometimes you’ll get better than 1 cent per point and sometimes worse.

Charity, Payments, Transfers and Other Options 

Some cards or loyalty programs let you donate your points or miles to charities partnering with the program. If you’d like to give your points or miles away to another individual, family member or friend, some cards and points programs will also allow you to do so. 

As always, check redemption rates. 

Takeaway

When deciding the best way to redeem your credit card rewards, consider all of the options available to you, and settle on a strategy most valuable to you, and your lifestyle. A savvy redemption strategy for an avid traveler might look very different than one for someone who prefers the nightlife and dining out. Whichever method you use, just ensure you’re getting that 1 cent redemption rate. 

Article Sources

  1. Chase. "Rewards." Accessed Jan. 7, 2020.

  2. Mariott Bonvoy. "Travel Packages." Accessed Jan. 7, 2020.

  3. Marriott Bonvoy Moments. "All Moments." Accessed Jan. 7, 2020.

  4. American Express. "Pay With Points at Checkout - JustGiving." Accessed Jan. 7, 2020.