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6 Ways NOT to Spend Your Credit Card Rewards


May. 31, 2016 WiseBread

Most credit card rewards go the way of our food scraps — down the drain. But it’s not because they aren’t valuable. Credit card rewards can fly you to places you couldn’t otherwise afford to go. You can even redeem them for free hotel stays and rental cars. Yet many rewards go wasted because cardholders either don’t understand how to redeem them or they mistakenly fail to do so by the expiration date.

Even if you’re one of those card holders who uses their rewards, there’s a good chance you could be flubbing it. Not all redemption offers are created equal. In fact, some rewards are far less valuable than others. Read on for our roundup of the worst ways to spend your credit card rewards.

1. Buying Stuff You Don’t Actually Want

Redeeming your rewards for gift cards can be a great move — if you use them to purchase items you were going to buy anyway. Otherwise you’d be spending unnecessarily, which is contrary to the concept of a reward. Here’s another tip: If you’re going to trade in your rewards for a gift card, it’s best to do so when the gift card is discounted (usually points are valued at one cent per point, so if you can get a $50 gift card for 4000 points, that’s a good deal).

2. Redeeming Them for Overpriced Merchandise

With sites such as Amazon and eBay, it’s easy to buy home goods and electronics for less than the retail price. And since credit card reward programs typically offer these items at an inflated price, redeeming your points or miles for a coffee maker or a digital camera is rarely a smart move. Better option: Get a gift card for Amazon or preferred vendor, and then buy the item at a discount.

3. Opting for a Cash-Out

Some credit card providers let you trade your points or miles for cash. Beware: It’s likely you’ll take a big hit on the redemption value. However, it can be better than nothing, if there are no other optiobigstns (like gift cards) that you would use. It’s better than letting your points expire. Again, look for a minimum one cent per point value.

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