Did you know that you can earn up to 50% cash back on certain purchases if you properly time your credit card rewards redemption? Whether you want to maximize your points redemption or this is your first time redeeming rewards, you’ll want to plan ahead to get the most out of the points you’ve earned. Keep reading to find out how you can maximize your rewards to get the most from your everyday purchases.
You can get different rewards from different credit cards. MoneyLion can help you find and compare credit cards. To get started, select why you may be looking for a credit card below:
Credit card rewards explained
Credit card rewards either take the form of cashback or rewards points. You can earn between 1% and 5% cash back. Alternatively, you can earn between one and 10 points per dollar that you spend using reward credit cards.
Generally, the higher the cash back or the points you earn, the more your annual fee will be. But you can still earn certain rewards with credit cards that have no annual fee.
Whether you choose a cashback or points rewards credit card will depend on your spending habits and goals. You’ll want to optimize your credit card perks based on your own spending habits.
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How to redeem cashback credit card rewards
The way you go about redeeming your cashback credit card rewards will vary based on your credit card issuer. Generally speaking, you will enter the website for your credit card issuer, sign in, and select the option to redeem cash.
You’ll be given a choice regarding how you want to receive your rewards. The most common options are check, direct deposit or statement redemption credit. Most credit card issuers will also let you make your decision directly from their app.
Many credit card issuers set a minimum dollar amount that you must reach before you can redeem your points for cash back. For instance, $50 is a common dollar amount that you must reach before receiving rewards.
In that case, if you have $56 in cash back rewards, you can redeem the full $56 for rewards. But if you have $45, you will need to wait until you have at least $50 until you can redeem your points for cash back.
How to redeem credit card points
Points redemption is simple, though it can also require you to carry out a bit more strategizing. In simpler terms, you’ll need to log in to the website of the credit card issuer and then enter their linked rewards site to redeem rewards for the value of your points.
For airline credit cards, you’ll usually receive miles via the airline’s rewards program. In that case, you can usually redeem points directly with the airline on their website. The same is true for some hotel rewards credit cards.
For credit cards with flexible points, you’ll have the option to transfer the points to various hotel or airline partners. Once you’ve selected the rewards you like, the website will confirm you have enough points, deduct them from your account and generally send you an email confirmation of the reward redemption.
How to redeem credit card travel miles rewards
Credit card travel miles points redemption gives you credit to fly for miles in place of dollars. Nearly all major airlines have a rewards program, and most carriers are linked to one or more rewards credit cards.
To redeem travel miles, you’ll want to search on the airline’s website for tickets with miles on the route you want to take. You’ll get the best deals if either the dates or destinations are flexible.
For example, let’s say you have 80,000 United Airlines miles that you want to use. You search on United’s website, where you find that you can book a flight on Lufthansa, which is a partner of United, from Chicago Illinois, to Vienna, Austria for 37,500 miles each way while earning points redemption.
You will then select from the list of possible routes for the one with the best schedule for your needs. From there, follow through with the checkout process. Instead of paying with a credit card, United will deduct the miles from your account.
There is often a booking fee ranging from $5 to $100, and you’ll need to pay with the credit card associated with your airline. Plus, with many airlines, mileage tickets are fully refundable, giving you total flexibility if your plans change.
How to maximize your credit card rewards
To get the most out of redeeming credit card rewards, you’ll want to choose a high-value item. In the example above, the same roundtrip flight could cost $1,000 or more, making it a good points redemption value.
If the cost of the roundtrip ticket from Chicago to Vienna was only $250, it wouldn’t be worth the points. Here are other considerations worth keeping in mind when you want to maximize credit card rewards and points redemption.
Choose the right redemption category
Getting the most out of rewards credit cards starts with choosing the right rewards card. Select a rewards card that offers the most cashback or points in your major spending categories, such as travel, groceries or gas.
If you have a card that offers higher points in certain categories, make sure you use it for all purchases in those categories. Then, when redeeming rewards, be sure to choose a redemption category that offers the greatest value.
In the flight example above, let’s say the dollar value of the flight was $1,200. In that case, you earned about 1.6 cents per point. That is better than the standard valuation of one cent per point, which is offered by most credit cards when you choose cash rewards.
Take advantage of the most valuable category
Some credit cards offer more points redemption rewards than others in certain categories. For example, most travel credit cards offer the greatest value when you’re redeeming rewards.
Gift cards usually offer lower value on many credit cards. That is, the conditions may be different if you wait to redeem the points until after the credit card issuer offers a reward bonus for gift cards.
Ultimately, determining the most valuable category will depend on your credit card. You can search online or on the credit card issuer’s website for more information.
Make use of bonus offers
Bonus offers are the best! In addition to a signup bonus offer, credit card issuers offer additional rewards on certain points redemption. For example, they may offer up to 50% cash back on certain purchases or purchases made at certain stores.
Other bonus offers include gift cards with 20% greater value, earning additional airline or hotel points and extra cash back in certain spend categories, which usually rotate throughout the year.
Look out for shopping discounts
Some credit cards offer additional rewards for shopping with certain merchants, which often leads to higher points redemptions. Most airline credit cards offer shopping portals.
Capital One offers a browser plugin that automatically scans for the best coupons that are available for nearly every website. Many credit card issuers offer shopping discounts and rewards for that change regularly, giving you the chance to earn more from your points redemption.
Other credit card rewards
When deciding on the best reward card, you’ll need to take into account the annual fees, think about the realistic number of points you can earn per year and determine if there are additional bonuses or rewards available to you.
For example, most airline credit cards offer one or more free checked bags, free lounge access and a free annual companion ticket. Other credit cards offer additional rewards credits in certain spend categories, such as a $300 statement credit for travel offered by certain premium rewards cards. Other credit card benefits include credits on entertainment subscriptions or reimbursements for TSA PreCheck.
Final tips on redeeming credit card points
Redeeming credit card points can be as simple or as complex as you choose. Most credit card issuers have both a website and an app that you can use to easily view your account. These are the places where you can look at how many points you have and choose from your points redemption options.
Keep in mind that credit card points aren’t a long-term investment strategy. Don’t save them with the hope of passing them along to your children, as points are periodically devalued with little warning. Instead, use them regularly or save them up for specific short-term goals.
Speaking of goals, how you redeem credit card rewards will depend on your goals. Seeing as the majority of consumers never redeem credit card points, it’s better to use redemption credit points than to lose them.
And finally, remember the basics of good credit building. Never overspend just to earn credit card points. It’s not worth it in the long run.
FAQ
How do I turn my credit card points into cash?
Whether you can turn credit card points into cash or not depends on your credit card and if it offers redemption credit for cash back. If that is an option, you can request points as cash back on the credit card issuer’s website or through their app for easy cashback points redemption.
How often should you redeem credit card rewards?
The rate at which you should redeem credit card rewards depends on your goals. If you want to redeem cashback points, you can do that when you reach the minimum redemption value. On the other hand, you might want to save your points and use them later to redeem them for more expensive rewards, like flights or hotels. Keep in mind that airlines and hotels can devalue points at any time, so it’s not worth saving points for years.
Can I pay my credit card bill with reward points?
Some credit card companies will allow you to do this. While this will reduce your total credit card bill, if you owe more on the account, it does not count as paying the minimum balance due.
