The Best Ways to Redeem Credit Card Rewards

Quick Answer

Whether you have a cash back or travel rewards credit card, you can often choose from several redemption options. Generally, you get the most value from sticking with the card’s intended purpose—cash back or booking travel.

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Some of the best ways to redeem credit card rewards include booking travel and getting cash back. With most programs, you want to get at least 1 cent per mile or point (100 points equals $1, for instance). There are sometimes ways to get a much higher value, but the specifics depend on which credit card you have, your goals and how much time you want to spend learning the ins and outs of your card's rewards program.

The Best Ways to Redeem Credit Card Rewards

Rewards credit cards commonly offer one of four types of rewards:

The best redemption options can depend on your specific card and your goals. For example, if you have an airline or general rewards card, a first-class flight might be great if it's just you and your partner. However, if you're booking travel for a family of four, getting the most bang for your buck might mean focusing on economy flights and longer stays at basic hotels.

The Best Ways to Redeem Cash Back

If you have a cash back credit card, you might earn cash back rewards that appear in your account as dollars, or get points or miles in the card issuer's program that you can redeem for cash back. When the latter is the case, your points and miles are generally worth 1 cent each, so 100 points or miles will equal $1.

You can often decide how to redeem your cash back rewards, and common options include:

  • Bank account deposit or ATM withdrawal: A convenient way to get access to your rewards, but it may only be available if you have a checking or savings account with the card issuer.
  • Check: Another convenient option, though you'll have to wait for the check to arrive in the mail.
  • Statement credit: A statement credit can lower your credit card balance, but it might not be the best option. With some cards, you won't get additional cash back for the portion of your balance that you pay off with your statement credit.

Some cards may also offer additional ways to redeem your rewards, such as using your cash back to shop, but these options usually aren't as good as simply getting your cash back and then spending it. Two exceptions are if you can get a bonus for redeeming your cash back rewards for a gift card and when you can transfer the cash back you earn (as points or miles) to another card from the same issuer.

The Best Ways to Redeem Loyalty Program Points and Miles

You can use hotel and airline credit cards to earn points and miles in the corresponding company's loyalty program. While you might have many options for using your rewards, booking a flight or hotel stay are often the best. Still, there are a few tips to keep in mind.

Long Hotel Stays

Although you'll need a lot of points to book several nights in a row, some hotel loyalty programs, such as Hilton Honors and Marriott Bonvoy, will give you a fifth night free when you redeem your points. Saving up for these longer redemptions can increase the value of your points, especially when you're booking higher-end hotels.

Luxury Travel

You can generally get the most value per point or mile when you redeem rewards for business or first-class flights and stays at luxury hotels, especially when the program doesn't base the number of points or miles you need on the current price. The downside is these bookings generally still require a lot of rewards, which can take a long time to earn, and there might be limited availability for reward bookings.

Book Flights on Partner Airlines

Many airline cards let you use your miles or points to book a flight on a partner airline. Sometimes, this can lead to great redemptions, particularly if you're flying abroad. However, it can be hard to find availability, as airlines might not release a lot of award seats to their partners.

The Best Ways to Redeem General Travel Points and Miles

You can use travel credit cards and certain cash back cards to get points in flexible rewards programs, such as American Express Membership Rewards, Capital One Venture Miles and Chase Ultimate Rewards.

These programs offer many redemption options, and you should aim to get at least $1 per 100 miles or points you redeem. However, the best redemption options tend to fall into a few categories that offer even better value.

Book Travel

Many of the programs have travel portals where you can use your rewards to book travel. You generally get 1 cent per point or mile, but sometimes you can get more. While you can book various types of travel, including rental cars and cruises, you might not find every option. For instance, Southwest flights and some boutique hotels might not appear in the results. Some cards let you use your rewards to offset previous travel purchases rather than book travel, which can help you avoid these drawbacks.

Transfer Your Points and Book Reward Travel

Many programs let you transfer your points to partner airline and hotel loyalty programs. Sometimes you can get much more than 1 cent per point if you transfer and book award travel, especially if you're booking luxury travel. You can also compare the cost of paying for a flight or stay using your points versus booking an award trip to see which will be best.

Exchange for Gift Cards

Although the programs are flexible, you might get less than 1 cent per point if you want cash back or if you book certain types of travel. If you're looking for cash, but won't get a good cash back rate, a workaround could be to opt for a gift card. Although you may need to meet minimum redemption requirements, gift cards are usually available for 1 cent per point, and sometimes you can redeem fewer points for selecting certain gift cards. For example, if a $25 gift card usually costs 2,500 points, there may be offers that only require 2,000 points.

Think Twice Before Redeeming Rewards for These Options

Cash back and travel tend to be the best redemption options, but you might be tempted by some of the alternatives, such as exchanging your rewards for merchandise or using them to shop online. But often, these aren't great options.

You often receive less than 1 cent per point—sometimes just half as much—using other alternatives. You also can't take advantage of other savings or bonus reward-earning opportunities, such as getting bonus rewards by shopping online via a shopping portal.

You can also often donate your rewards to charity. However, you might not be able to claim a tax deduction for the donation because the card issuer or loyalty program is donating your rewards on your behalf. A better option could be to get cash back (if it's at a good value) or a gift card and then give the equivalent amount directly to the charity.

The Bottom Line

Earning rewards on purchases you were going to make anyway is one of the many ways using a credit card can be beneficial. But you also want to make sure you're getting a great value when you redeem your rewards. Compare the options and requirements to see which will give you the most value on redemptions. If you want to be sure you're maximizing your earnings, you can also compare current card offers with Experian CreditMatch™ and get specific recommendations based on your credit score.