You should redeem credit card rewards as often as possible, whether they’re points, miles, or cash back. It is important to redeem often because credit card rewards can be devalued or expire, depending on the type of rewards they are.
The longer credit card rewards earnings stay in your account unredeemed, the more time they’re subject to devaluation, the more likely they are to expire, and the less you actually get to benefit. Rewards don’t get you anything until you put them to use, after all.
Reward Expiration and Devaluation
Just because you earned your credit card rewards fair and square doesn’t necessarily mean they’ll retain their value, or that they’re yours forever. Some credit card rewards expire after a certain amount of time if you don’t redeem them. In fact, some credit card terms state that other events, such as a late payment or even prolonged account inactivity, can put your rewards in jeopardy. So it’s a good idea to read the terms closely.
However, making sure you’re aware of everything in the card’s terms may not be enough. Many credit card companies have language in their terms allowing them to change the rewards structure at any time. They can change rules that govern which purchases earn rewards, how much your miles or points are worth, and anything else about the rewards program. For example, a credit card company can decide your 30,000 points are worth $250 rather than $300.
Redeem Rewards Often
The possibility for change in credit card rewards programs is reason enough to redeem your rewards often. Rewards from cash back credit cards are considered the most stable rewards, because they can’t be devalued by credit card companies. That doesn’t mean they can’t expire, though. And due to possible devaluation or expiration, miles and points should also be redeemed as often as possible.
Frequent Travelers May Want to Save Up
Miles and points can definitely serve people better when they’re saved up to redeem for travel. But expired or devalued miles and points won’t take you anywhere. That’s why it’s a good idea to pay for travel with a combination of points/miles and cash, if the rewards program allows it.
If you can’t pay for your travel accommodations partly with rewards and partly with a normal credit card purchase, stockpile points or miles with caution, and only after determining exactly when they could expire. Plus, if you’re not in a position to redeem points or miles regularly, you might get more value and enjoyment from a cash back credit card instead.
Final Thoughts
At the end of the day, knowing when and how to redeem credit card rewards to get the best value can be tricky, considering the obstacles of devaluation, expiration, and varying redemption rules. For instance, many credit card rewards programs have minimum redemption thresholds, meaning you can’t redeem your rewards until you collect a certain amount of them.
But there are solutions to such problems, and applying them to your situation can be very valuable. For example, some credit cards have the option to auto-redeem once your unused rewards hit a certain threshold. Doing that is a good idea if you don’t want to redeem for travel. That way, you’ll know your rewards won’t be sitting in your account, waiting for the rules to change.
This answer was last updated on 03/04/20 and it was first published on 03/04/20. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
You should redeem credit card rewards as often as possible, whether they're points, miles, or cash back. It is important to redeem often because credit card rewards can be devalued or expire, depending on the type of rewards they are.
When should I redeem cashback on my credit card? ›
You'll generally want to redeem your cash back once you earn enough cash-back rewards to redeem at the best rate. For example, some cards require you to redeem for at least $25 of cash back to access the most valuable redemption options.
When should you cash out credit card rewards? ›
Or, if your credit card has a minimum redemption amount, redeem every time you reach that minimum. Keep in mind that many of the best cash-back cards allow you to set up automatic redemptions for specific periods of time, such as monthly or every three months.
Is it better to redeem credit card points for cash? ›
At the end of the day, the rewards that you'll use and enjoy will almost always be the best choice—even if it doesn't net the highest value from each point. Whether that's increasing your savings with cash back or taking your family on vacation you couldn't otherwise afford, the choice is up to you.
What is the best way to redeem credit card points? ›
Key takeaways
To get the most value from your points, redeem them for high-value options like travel or points transfers to airline and hotel partners.
When should I claim cashback? ›
Choosing whether to redeem your cash rewards right away or save them toward a specific goal often comes down to personal preference. Do you plan to travel soon, or could you use the cash to pay down debt? If you decide to save your cash rewards, you must monitor your account.
Is it smarter to take the cash back or keep the points on a rewards card? ›
Key takeaways. Cash back credit cards are generally the better choice if you want to earn simple rewards on your regular purchases. A points or miles card may be a better option if you travel often or want to start earning travel rewards on your purchases.
Is it better to use points or save? ›
Additionally, it is important to maintain a mentality of “earn and burn”, meaning that you aim to use the points nearly as quickly as you earn them. This will eliminate the risk of your points being devalued and keep more cash in your pocket.
Can I use my rewards points to pay my bill? ›
For some cards, accumulated reward points can be used towards your next credit card payment. In some cases, redemption options include requesting your reward points as cash payment through a check or direct deposit, which you can then use to pay for your next credit card payment.
What happens when you redeem cash rewards? ›
Cash back rewards can be redeemed for statement credits, converted into online shopping credits or deposited directly into bank accounts — it's up to you to decide what to do with your cash back once you've earned it.
Both miles and cash back cards have their benefits and drawbacks. But ultimately, consumers who prefer straightforward cash rewards will prefer cash back cards, and frequent travelers will prefer earning and maximizing rewards with miles credit cards.
What is the difference between reward points and cash points? ›
There are many different ways in which a card can offer this cashback. Some of them offer cashback through bank deposits while many others offer them in credit statement. Reward points on the other hand are points that can be redeemed as per the rewards programme of the card provider.
What is the best way to convert reward points to cash? ›
Write to the credit card issuer's customer care to redeem the reward points. Provide the details about the credit card such as the desired reward option, and the number of points you want to redeem in the post.
How do I know when to use credit card points? ›
When is the best time to redeem rewards?
- Your rewards points are about to expire. ...
- Travel redemptions you want are available. ...
- You're going to cancel your credit card fairly soon. ...
- You found a special offer. ...
- You're ready to splurge. ...
- You're racking up points for a specific redemption. ...
- You want more options later on.
Go to your card issuer's website
Once you've made your purchases, earned your rewards and saved enough cash back, redeeming your rewards is relatively easy. On the card issuer's website, there will typically be a redemption portal where you can see what you've earned and choose how you want to redeem it.
How to use cash back effectively? ›
How to redeem cash back
- Statement credit: Apply cash back as a credit to your account balance. ...
- Direct deposit or check: You can often transfer cash back to a linked bank account or request a paper check.
- Gift cards: Some cash-back cards may allow you to redeem cash back for various gift cards.
How to maximize cash back with your credit card
- Choose the right cash back cards.
- Combine category cards with flat-rate cards.
- Take advantage of issuers' shopping portals.
- Make the most of cash back apps.
- Use your cash back wisely.
There are a few drawbacks to a cash-back rewards card, including a higher-than-usual APR, having to wait to access your cash-back funds, and a cap on how much you can earn each year. Also, when it comes to travel rewards such as airline miles, sometimes the miles are worth more than the cash. Experian.
Does using cashback affect credit score? ›
When it comes to understanding cash back and credit scores, it's important to know that they don't directly impact one another. Using cash back offers doesn't negatively affect your creditworthiness. In fact, when managed responsibly, using a credit card with cash back benefits can improve your credit score.
