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The Worst Mistakes to Avoid When Redeeming Your Credit Card Rewards

Updated: Jun 23

Key takeaway
  • Redeem travel card miles for travel rather than using it for a statement credits to maximize the value.

  • Prioritize using credit card rewards for free hotel stays rather than on-property credits like dining or spa services.

  • Use airline card rewards for flights to get the most value out of them.

  • Be cautious when transferring credit card rewards to friends and family, as there might be fees and limitations that could reduce the value of the points.

  • Consistently monitor the expiration dates of your points to prevent losing your rewards, and plan your redemptions accordingly.

1. Cash Back on a Travel Card

If you have a cash back credit card, redeeming your rewards for cash is usually the best option. However, when it comes to travel cards, cash back is rarely the most lucrative redemption choice. When you will redeem Some travel credit cards your miles for travel, the point value could be well over 1.5 cents per mile. However, if you choose to reddem it as a statement credit, you'll only receive 0.5 cents per mile. Lets take for example you have a credit card that gives you 1.5 cent per point on travel if you have 60,000 points you will get $900 towards travel but if you would use those points for a statement credit you will only get $600 for it.

2. Pay with Points

Some rewards programs allow you to use your points to shop online directly with retailers. While this option may seem convenient, it often offers significantly less value than other redemption methods. For example, using your points on through the Chase Ultimate Rewards program will only get you 0.8 cents per point. However, if you were to use those points for travel, you could get close to 1.5 cents per point, which is almost double that of using it on Amazon.

3. Redeeming Hotel Credit Card Rewards for Hotel Services

If you have a hotel credit card, it's best to use your rewards for free hotel stays instead of other on-property credits like dining or spa services. While it may be tempting to use your points for these additional services, the value you receive is often much lower.

For example, the World of Hyatt hotel rewards program offers an average value of 2 cents per point on hotel stays. However, if you choose to redeem your points for dining, spa, or other on-property credits, the value drops to between 0.5 and 0.83 cents per point, depending on the redemption. That could be 30% of the value of using it as a free hotel stay.

4. Redeeming Airline Card Rewards for Anything But Flights

Similar to hotel credit cards, it's best to use your airline card rewards for flights rather than other non-flight redemptions. For example, redeeming Delta SkyMiles for a coffee maker offers a value of 0.46 cents per mile, while redeeming them for award flights offers an average value of 1.61 cents per mile.

One exception to this rule might be purchasing a membership to the Delta Sky Club, the airline's airport lounge network. However, even in this case, the value is lower, with a redemption value of just 1 cent per mile.

To get the most value out of your airline card rewards, prioritize using your rewards for award flights rather than non-flight redemptions.

5. Transferring Rewards to Friends and Family

While some credit card rewards programs allow you to share your points with others, be cautious when transferring your rewards. Some programs charge fees for transferring points, effectively reducing their value.

For example, sharing IHG Rewards Club points comes with a cost of $5 for every 1,000 points transferred, which equates to 0.5 cents per point. Since IHG points have an average value of 0.55 cents apiece for free stays, sharing them would effectively neutralize their value.

Additionally, be aware of limitations on point transfers. Citi allows free point transfers to someone else, but there is a cap of 100,000 points per year, and shared points expire 90 days after the transfer.

So, unless there is a significant need to transfer your points, it's generally best to keep iyt to yourself to maximize their value.

6. Losing Rewards Due to Expired Points

One of the most common ways to lose rewards is by allowing your points to expire. While most major credit card rewards programs do not have expiration dates for points, it's crucial to verify the terms and conditions of your specific program.

For example, the Citi rewards program has cards with no expiration dates, while others expire after three or five years. If you have an airline co-branded card, you may need to have some activity on the account every 18 months to keep your miles from expiring.

To prevent losing your hard-earned rewards, consistently check the expiration dates of your points and plan your redemptions accordingly. Some programs offer ways to keep your points active, such as earning points on your credit card or transferring points into the program.

In Conclusion

To maximize credit card rewards, avoid common mistakes like cashing out travel rewards for statement credits, using points for shopping, or redeeming rewards for lower-value services.

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