If you regularly use bonus credit cards, it’s only a matter of time before you’re ready to start using your points, miles or cashback. But sometimes it can feel like redeeming your rewards at their maximum value is just as hard as earning them in the first place.
Because different reward programs require different strategies, here’s a breakdown of how to use each type of credit card reward.
Types of bonus programs for credit cards
There are several types of rewards you can earn with credit cards, including cashback, points, and miles. If you are new to the rewards industry and want to travel, you might want to consider your first travel rewards card.
Cashback is often the easiest type of reward to redeem, but each card issuer may offer different reward redemption options.
Points and miles are the terms most commonly used in loyalty programs, and each will have its own rules for redeeming rewards. Airline miles are very popular but can be difficult to redeem for award flights at the lowest mile levels.
Hotel points can also have their problems, but are generally a bit easier than airline miles. In addition, there are credit card points that can be redeemed for various rewards, and sometimes converted into airline miles or hotel points, depending on the program.
How to get cashback
How cash rewards are redeemed depends on the rules of the card issuer’s program. For example, Capital One offers several cash back reward cards and you can redeem your rewards as a check or deposit the amount into your account as a credit statement.
You can claim cashback online or using the Capital One mobile app. In fact, you can set up your account to automatically redeem rewards every time you earn a set amount, starting at $25. You can also redeem your Capital One cashback for other options, including gift cards and Amazon.com purchases, but it’s important to know that your rewards may be worth more (or less) when you use them for these options than what you have. you would be. received in the form of a check or credit statement.
Capital One’s refund options are similar to those of other card issuers, including US Bank, Bank of America®, American Express, and more.
A notable exception is Citi’s Visa® Costco Anywhere card. With this card, your cash rewards are only available in February of each year in the form of a certificate. You can use your certificate to make a purchase at a Costco store or visit their customer service team to redeem it for cash.
How to use credit card reward points
There are many credit cards that have their own loyalty programs that give bonus points. The most popular programs include Chase Ultimate Rewards, American Express Membership Rewards and Citi ThankYou Rewards. When you’re ready to use your rewards through these programs, you have a wide range of options, including cash back, gift cards, merchandise, travel bookings, charitable donations, and credits for stores like Amazon.com.
Many of these programs also offer you the option to convert your rewards into Air Miles or Hotel Points with select travel partners. When you can find the perfect travel partner to transfer your rewards and redeem those points or miles for expensive flights or hotel rooms, you can reap significantly more value than if you used them for refunds or other options. .
How to redeem hotel points and air miles
Hotel rewards programs and airline frequent flyer programs offer points and miles that can be confusing to use. In airline frequent flyer programs, it can be extremely difficult to redeem your rewards for award flights with the lowest mileage levels. This is because major carriers American, Delta and United are using variable pricing systems that increasingly match the price of a new cash booking.
For example, it was once easy to redeem 25,000 miles for a domestic return ticket in economy class, no matter what the price of the ticket was. But today you can be charged twice as many miles for an expensive ticket, or half as many miles for a heavily discounted ticket. Or you can find a few tickets at a low price, but not as many as you need.
However, other carriers, such as JetBlue and Southwest, have frequent flyer programs that are more or less fixed cost. Through these programs, you can redeem your rewards for any unsold seat, and the number of points required is directly related to the price of the ticket. This makes it easy and simple to book as many rewards as you want, but you will never receive more than the face value of your points.
To complicate matters further, major US carriers allow you to redeem miles on flights operated by foreign carriers, which can make a huge difference when traveling overseas. Most airline programs also offer options to redeem your points or miles for other rewards such as merchandise, gift cards, hotel reservations and car rentals. But these non-travel options rarely offer the same value as award flights.
When it comes to redeeming hotel rewards, you often get the most value by redeeming your points during the high season, when rooms are the most expensive. However, you may need to book this premium stay in advance to find available rooms.
3 common mistakes to avoid with bonus cards
While bonus credit cards provide great opportunities for earning rewards, there are a few pitfalls to avoid. One or more of these mistakes can quickly diminish or even nullify your progress.
1. Missed or late payments
You can incur costly interest payments and fees if you make a late payment and also put your credit score at risk. So your top priority should be to always make your payments on time, preferably in full, to avoid accruing interest.
2. Missing the deadline for receiving the signup bonus
Another common mistake is missing out on a new account bonus due to not meeting the card’s minimum spend requirements on time. Keep in mind that these time limits are based on the day your card is approved, not when it was sent, received, activated, or used for the first time. Nothing is more depressing than checking that third claim on your new credit card and realizing that you were $80 short of 80,000 bonus points.
3. Exchange travel points for cash or goods
Finally, one of the biggest mistakes reward card users tend to make is exchanging points for cash or goods. These cash or merchandise rewards sometimes offer as little as half a cent per point or mile used, as opposed to a few cents for premium flight awards or peak season hotel rooms.
bottom line
There are many ways to maximize your credit card rewards. Savvy credit card users know that how you redeem your rewards is just as important as how you earn them. By taking the time to learn about each program and learn how to best use your rewards, you can be sure you’ll get the most out of your points, miles or credit card cashback.
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The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
