You’ve opened your first rewards credit card, gotten the welcome bonus, and now you’re sitting on a mountain of miles or points. What happens next?
It’s not as easy to figure out how to use your prizes as it is to earn them. Most miles and points can be redeemed in a variety of ways, each with a significantly different value. A 50,000-point welcome bonus on a credit card may get you $400 in items, $500 in cash, or a $1,500 business-class flight to Europe.
Before you submit your hard-earned points for redemption, here are three things to think about if you want to get the most out of your time and effort.
Whatever you decide to do with your rewards, you’ll want to get the most bang for your buck. Each program offers unique redemption choices, and the values for each redemption differ. As a result, it’s critical to consider what’s important to you and to grasp all of your alternatives for redeeming credit card benefits.
1. Redeem for cash back not merchandise
Redeeming points directly with a store is one of the simplest ways to use them. This isn’t always an option, but you can use points to pay at a variety of establishments. You can, for example, link multiple credit card rewards programs to your Amazon account and redeem them at checkout.
This is almost always a suboptimal use of credit card rewards.
When you use the same points to make an Amazon purchase, you’ll typically get 0.8 cents per point. Instead of earning $100 in cash, you will receive $80 in Amazon items for your 10,000 points. By cashing out your points, you will receive a larger dollar value and will be able to pay with a credit card and earn rewards.
The sole exception is when there are limited-time specials with higher value. For example, if you pay with at least one point, you may be able to obtain 30%-50% off your Amazon order.
2. Book once-in-a-lifetime experiences not just another vacation
Thanks to substantial credit card bonus offers, points and miles can unlock once-in-a-lifetime experiences that you otherwise couldn’t (or wouldn’t) afford.
For example, you could apply for the Chase Ink Business Preferred® Credit Card, which offers a 100,000-point welcome bonus after spending $15,000 on purchases in the first three months following account opening. You’d have at least 115,000 Chase points after satisfying the spending threshold and earning points. You may then redeem those points for a first-class flight with Emirates. You’ll get a totally flat bed, delicious meals, and access to a shower spa with heated floors, depending on the airline. A one-way first-class ticket from New York to Milan usually costs between $6,000 and $8,000, but you can book that route for as few as 102,000 Emirates miles.
If a private island stay is on your bucket list, the Calala Island resort may be booked for 35,000-45,000 Hyatt points per night. This resort is exclusive, with only four accommodations and rates that often exceed $2,000 per night. With the limited-time Chase Sapphire Preferred® Card welcome bonus, you may earn enough points for two nights. After you’ve been approved for the Sapphire Preferred, you can earn 80,000 bonus points by spending $4,000 on purchases during the first three months of your account’s inception.
3. Have a goal instead of looking for the “best rewards”
Before you apply for a credit card, set a reward target for yourself.This way, you can ensure that you’re receiving credit card rewards that are the most valuable to you.
Determine why you want to use points and move backwards from there. Consider where you want to go, where you want to fly from, and what precise expenses you want the points to pay. You don’t want to end up with a bunch of miles for an airline that only serves your hometown. Furthermore, if you’re traveling with a large group, some rewards are better for homestays and holiday rentals than others.
Of course, your points’ aims and priorities will change over time, which is why you should explore adaptable incentive systems. You may transfer points to a range of airlines and hotels, as well as redeem prizes for cash back, gift cards, and other items. With Amex, Capital One, Chase, Citi, and Bilt, you can earn flexible rewards. Many of the credit cards linked with these programs reward you lavishly for your spending and feature sizable welcome bonuses, such as the American Express Platinum Card® and the Capital One Venture Rewards Credit Card. Terms and conditions apply.