How to Redeem Credit Card Rewards

Introduction

A rewards credit card can be a powerful tool for increasing your purchasing power, but its real appeal is in the bonuses you get for your everyday spending.

Depending on the card, you could earn cash back, points, travel miles, or more, just by using it instead of cash, check, or debit. This opens up a world of rewards like plane tickets, merchandise, gift cards, statement credits, and more, since you’re paying for things you were going to buy anyway.

But earning is only half of the equation. When you redeem your rewards, you want to squeeze as much value out of them as possible. And to do that, it’s important to understand how, when and where to redeem rewards.

Let’s break down how these different credit card rewards work, how to redeem rewards, and how to maximize their value.

Understanding Different Types of Credit Card Rewards

Broadly speaking, there are three types of rewards credit cards, with each type offering unique ways to earn or redeem.

Cash back credit cards

Cash back is relatively simple. These cards reward you by giving you a percentage of your purchases back in the form of cash value.

Cash back rewards credit cards typically work in one of two ways. Some earn a flat rate on all eligible purchases. Others earn a higher rate on specific purchase categories, and earn a lower rate on the rest.

Regardless of how the earning structure works, cash back is popular because it’s generally easy to understand what you’ve earned and there are often many options for redemption.

Points credit cards

Points-based credit cards earn flexible rewards that can often be redeemed for travel, gift cards, merchandise, or cash value.

As with cash back rewards cards, these cards can earn points at a flat rate or via spending in specific bonus categories.

On the redemption side, some issuers let you transfer points to travel partners or redeem them on a retail portal for greater value.

Travel miles: Specific vs flexible

Travel miles cards earn rewards that can be used toward flights, hotels, and other travel expenses. These are usually in one of two categories:

• Airline or hotel-specific cards let you earn and redeem rewards within one loyalty program. These may also come with extra perks like status or priority boarding, so they’re great if you prefer a particular airline or hotel chain.
• Flexible travel cards give you the option to transfer your rewards to multiple airline or hotel partner programs, or you can redeem them through the issuer’s own travel portal. These may be useful if you have no preference for airlines or hotels.

Travel miles cards often deliver the highest value when you redeem rewards for flights or luxury accommodations.

Redeeming Cash Back Rewards

Cash back rewards are typically the easiest type of rewards to redeem and, in some cases, there’s nothing for you to do to redeem them.

Many card issuers offer automatic redemption as a statement credit, but others could require you to manually redeem cash back rewards. That could be as a statement credit, a check, or through direct deposit into your bank account.

Some card issuers also offer the option of redeeming cash back rewards for merchandise, gift cards, travel, charitable donations, or more.

A card issuer will typically have a link on their website that takes you to their redemption portal. From there, you should be able to check your rewards balance and your redemption options. Then it’s typically just a matter of selecting an option and following the instructions on the website. Should you have any questions or difficulties in redeeming your cash back rewards, reach out to your credit card issuer via email, text, chat, or phone.  

Redeeming Points

Points usually come with more redemption options than cash back rewards but, again, it depends on your particular points credit card. Either way, the process is pretty much the same.

Find a link to the rewards portal on your credit card issuer’s website, go to the portal, and then review your reward options. It may be worth doing a little research to see which redemption option provides you with the most value for your points. For example, if 4,000 points can be redeemed for a $40 statement credit or a camping cooler, and you’re torn between the two, research the price of that cooler online. If you find that cooler can be purchased for $30, then the statement credit provides more bang for your buck (in this case, points) — $10, to be precise. You’d be better off taking the statement credit and just buying the cooler yourself.

If your points are redeemable for travel, such as airfare or hotel stays, then you’ll have the added steps of selecting the dates you wish to travel. Keep in mind that there may be restrictions or blackout dates for travel rewards, depending on your credit card.

Again, if you encounter any confusion or need assistance in redeeming your points, contact your credit card issuer.

Redeeming Travel Miles

Redeeming travel miles tends to be the most complicated type of rewards redemption because of scheduling issues — your schedule, the schedules of airlines and hotels, and other restrictions like blackout dates. Once again, the travel reward options available to you will depend on who the card issuer is, but the redemption process is basically the same as with points.

Some mileage rewards cards offer you the option of redeeming your miles with their travel partners. If you’re considering doing this, make sure you’re aware of what “exchange rate” you’re getting. If it’s one-to-one, as in every mile you earned with your credit card is also worth one mile with the travel partner, then it may be a good redemption. On the other hand, it’s always possible that the travel partner requires more or fewer miles for the same trip redeemed with your card issuer, so be cognizant of that as well. 

Most travel rewards cards also offer non-travel redemption options. These may include gift cards, cash back rewards, merchandise, or more. Just be aware that travel credit cards tend to give you more “bang” when you redeem your points or miles for travel-related rewards.

Having problems redeeming your miles? You guessed it — contact your card issuer.

Comparing Redemption Options: Cash Back vs. Travel vs. Merchandise

Tips to Maximize Your Credit Card Rewards

Here are a few ways you can squeeze out even more rewards from your card:

• Use a rewards card for both everyday purchases and bonus categories to rack up rewards faster.
• Stack your card’s standard rewards with rewards from the issuer’s shopping portal.
• Redeem your rewards during promotional periods when issuers may offer extra value — like 10% more when you redeem rewards for certain gift cards or transfer to a specific hotel partner.

Common Pitfalls to Avoid When Redeeming Rewards

No one likes to miss out on a good thing. Keep an eye out for some situations that could throw a wrench into your redemption plans.

Expiring points or miles

Some programs have points or miles that expire if there’s no earning or spending activity after a certain period. Try to keep your account active so your rewards don’t vanish.

Low-value redemptions

Merchandise and gift cards can provide poor value compared to travel or statement credits, especially if the merchandise can be bought on sale or if you can find the gift cards at a discount elsewhere, like at a wholesale club. It’s a good move to be selective when you redeem rewards.

Not reaching the minimum redemption threshold

Many issuers require you to have a minimum balance of rewards before you can redeem them. Know this limitation so you can avoid a surprise when you really want to make that redemption.

Redeeming without comparing value

Researching actual prices lets you see what kind of redemption makes the most sense. For travel, compare transferring to the partner program, booking through the issuer’s travel portal and just redeeming for cash. A few minutes of research can make a big difference.

Conclusion: Making the Most of Your Credit Card Rewards

It’s exciting to earn and redeem rewards from your credit card. But if you want to take your rewards to the next level, you’ll have to really understand your card’s earning and redemption options and how they work with your lifestyle.

Being strategic in how you redeem rewards, whether you’re after cash back, travel, or merchandise, will ensure that you get the maximum value.

If you’re looking for a new credit card that offers rewards, you can see if you pre-qualify for one from Credit One Bank. It only takes a minute to check and there’s no impact on your credit score.

FAQs

How often should I redeem my rewards?

It depends on your situation. Some people choose to redeem rewards as soon as they earn them. Others save up for bigger redemptions like travel. If your rewards don’t expire, you can afford to wait for the best value.

Do credit card points expire?

Some programs have points that expire after a certain period or if your account becomes inactive. Check your issuer’s terms to know how long you have to redeem rewards.

Can I redeem rewards for travel even if I don’t have a travel card?

Yes, many points and cash back cards let you redeem rewards for travel, though travel cards often provide the best redemption rates.