Getting started with a travel credit card can be a lot of fun. Most of these cards have big welcome bonuses, so it probably won’t take you long to rack up tons of points and miles. When you’re ready to redeem these rewards, you have more options than cash back cards.
Here’s the hard part: They are not all good options. Some ways to use your benefits are much less valuable than others. If you make the wrong choice, you will get very few points. Before you take advantage of your travel rewards, you should know which redemption options to avoid.
Some travel cards give you the option to use rewards at checkout with online merchants. For example, you may be able to associate your rewards with Amazon and pay using points there. PayPal is also a popular option. Stores that offer PayPal checkout may have the option to pay with points.
Featured offers: Save money while paying off your debt with one of these top-rated balance transfer credit cards
While this may seem convenient, it’s a bad deal. This method usually significantly reduces the value of your points. For example, when you use Chase Ultimate Rewards points to book travel, he can earn between $0.0125 and $0.015 per point depending on which Chase card you have. At that value, 100,000 points is worth him $1,250 to $1,500.
You can also pay with Chase points at checkout, but you’ll only get a value of $0.008 per point. The same 100,000 points are worth $800, so You’ll lose anywhere from $450 to $700 in value.
2. Receiving cashback
Most travel cards allow you to convert your points into cash back as a statement credit on your credit card. Again, doing this usually means giving up value. For example, with American Express Membership Rewards points, you only earn $0.006 per point when redeeming cash back.
If you want to earn cash back using your credit card, getting a travel card is not a good idea. Check out cashback credit cards instead.
3. Purchasing products and gift cards
Your travel card rewards program may include a shopping portal where you can use your points to purchase items such as Apple products. Also, most rewards programs give you the option to use your points to purchase gift cards.
The problem is, you guessed it, value, or lack thereof. This is another type of redemption where you don’t get as many points. Typical rates are between $0.006 and $0.01 per point, depending on the card you have.
4. Transfer to travel partners in front Know what you want to book
Many of the most popular travel credit cards allow you to transfer points to airline and hotel partners. For example, Chase points can be transferred to more than a dozen partners, including United Airlines and Hyatt Hotels.
Transferring is one of the best ways to use your Travel Points. You can often earn $0.02 to $0.03 or more per point this way. I almost exclusively transfer travel points.
However, transfers are irreversible, so you should only transfer your points if you know exactly how you want to use them. Don’t transfer 50,000 points to United just because you think you’ll fly with that airline at some point in the future. If you’ve already found a ticket you’d like to book on United Airlines and it costs him 50,000 miles, do it.
5. Hoard
This is not a way to redeem travel rewards. It’s the opposite. But this is also a common mistake, so it’s worth mentioning.
Some people are good at accumulating travel points but bad at using them. They either don’t travel that often or they want to save up points in hopes of eventually using them for great deals.
Travel rewards are of no use if left unused. It’s not like putting your money in a high-yield savings account and earning interest. It’s just points and only has value if you use it for travel.
The most important rule: Use your travel rewards to travel.
If there’s one thing to remember, it’s that you get the most out of your travel rewards when you use them for travel rewards. This typically means using them to book travel through your card issuer’s travel portal or transferring them to a travel partner. You can safely ignore non-travel options, such as paying with points at checkout or receiving cash back. You don’t get much bang for your buck, or in this case, points.
Warning: Our top-rated cashback cards offer 0% introductory APR through 2025.
This credit card isn’t just great; It’s so good that our experts use it personally. It features a long introductory APR period of 0%, a cashback rate of up to 5%, and for some reason, all annual fees are waived. Click here to read the full review for free and apply in just 2 minutes.