The 3 Worst Ways to Redeem Credit Card Rewards

Advertiser Disclosure

You’ve carefully accumulated a bunch of points in your credit card rewards account, now you are wondering how to redeem them. There are definitely good and bad ways to do this, and certain ways to redeem them that will get you much more value than others. Let’s go over a few of the common options—the ones that you should avoid like the plague—so that you can ignore these and move on to better choices and make the most of those hard-earned points.

Merchandise

Most of the rewards credit cards offer merchandise options for redeeming your points or miles. You should know, going in, that this is generally a terrible option if you are looking for great value. In general, you are going to pay more for merchandise than you would if you were paying cash for the item.

Sure, when you “spend” points, it is like getting something for free, but, you could get more value by taking the cash back and then buying the item on your own, rather than through the credit card shopping options. Especially if you can find something on sale or use a coupon! Plus, keep in mind that you will earn points for purchasing the item when you use your credit card instead of redeeming your miles or points.

Statement Credit

When you request a redemption of points for a statement credit, all you are doing is lowering your balance. Instead, consider the fact that you can usually get more value (more cents per point) when you redeem for travel, or even cash back. Examples of this would be the Chase Sapphire Preferred or the Chase Ink cards that earn valuable Ultimate Rewards points, or American Express cards that earn Membership Rewards points. These programs offer you flexibility and higher redemption value with their travel transfer partners, and more.

Exceptions to this rule are cards like the Capital One Venture and the Barclaycard Arrival. For example, you can redeem points earned with the Barclaycard Arrival PlusTM World Elite MasterCard® for a statement credit towards travel purchases and receive a solid value of 2.2 points per dollar. But you would receive less than half that value if you weren’t redeeming for travel.

Check your terms and conditions carefully, but statement credits are generally not the best way to go when you want to get the most out of every point that you have earned.

Charity Donation

Everyone likes to feel good and give back to their community. Charitable donations are a popular way to do this. It might seem as if using your rewards points for a charitable donation is a great way to do this, since it doesn’t cost you anything to give this gift, but you can actually do more when you use your points more wisely and just donate cash to the charity of your choice.

Also, when you donate your credit card rewards, you cannot take a tax deduction for your good deed. Instead, redeem your miles for something more valuable (travel benefits, cash back, etc.) and take the tax deduction, which might allow you to donate a little more.

Other Ways Rewards Are Lost

Unfortunately, many people fail to make the most out of their rewards, by either failing to redeem them in the most valuable way or simply losing out on them by letting them expire, canceling a credit card before redeeming the points or not keeping their credit card in good standing.

Keep careful track of your points, and know if and when they will expire. Some may never expire, which is great, but you need to be paying attention. Periodically take a look at the rewards and set a goal for what you hope to do with your points, so that you can remember to keep track.

Also, make sure that you make all of your credit card payments on time. Some banks may include a statement in the terms and conditions that tells you they reserve the right to revoke your points if you do not keep your account in good standing. So, not only will you probably pay late fees and be assessed a penalty APR, you may lose your points, too!

Finally, before you cancel any credit card, make sure that you do not have points accumulated in your account. If you do, make sure you redeem them before canceling or you will lose them.

Conclusion

You work hard to accumulate your rewards points, so you should make sure that you make the most of them. There are definitely plenty of options, and some are clearly better than others. Know what the terms and conditions are for your rewards accounts so that you can make the best choice about how you redeem your points!

Take a look at our list of the best rewards cards out there to find one that works for you!

Leave a Reply