There are many ways that you can redeem your existing rewards. In fact, just finding the best method to do so can be confusing. What makes the rewards game so tricky is that many consumers don’t understand how to stretch the value of their rewards. This is different from the number of points/miles used for a purchase. Here’s a great example on how you can get the best value for your points.
Below we have listed various ways that rewards can be redeemed and included some insight from LifeHacker to help consumers understand the best redemption methods.
Using your rewards for cash back is the most straightforward and transparent way to redeem your rewards. Most credit cards that show rewards as points offer a simple 1-to-1 conversion (1 point = 1 cent), so you know the true value of each point, unlike with miles. You can typically redeem your cash back rewards for any amount and at any time via a check from your credit card issuer or as a direct deposit into your checking or savings account. However, there are two other ways to use your rewards for cash back:
- Statement Credits:
Many rewards programs provide the opportunity to redeem reward points for statement credits on your credit card bill. However, it is important to know how much these points are worth as they may vary depending on the card issuer. You may also want to consider comparing the value of your points for statement credits vs. travel reservations, cash back, or other options.
For example, according to the Chase Sapphire Preferred® with Ultimate Rewards℠ Program Agreement, cardholders can redeem their Ultimate Rewards points for just one cent each as statement credits. But those same points are worth 1.25 cents towards travel reservations booked through Chase, or may be worth even more when transferred to different travel partners, depending on the value of the services you redeem your points for.
- Redeem for Previous Purchase: Some card issuers such as Citi, Capital One, Barclays, and American Express offer consumers the option to redeem points or miles (depending on the program) as statement credits to “erase” the cost of previous purchase made with their credit card. Some cards even offer incentives for redeeming points or miles for past purchases by offering a percentage of your total miles or points back, such as 10% back on the rewards you redeem.