Published in: Credit Cards | Sept. 16, 2020
By: Lyle Daly
There are more ways than ever to redeem your travel rewards, but not all of them get you a good value.
As the COVID-19 pandemic has stretched on, it hasn't gotten any easier to figure out what you should do with your travel rewards. Travel is coming back, but it's a gradual process and if you're not comfortable with the idea of taking a trip yet, you're not alone.
Your options will depend on your travel credit card, especially as some credit card companies have offered additional redemption options during the pandemic. Here's a closer look at the most common routes you can choose and their pros and cons.
The simplest option is to keep your travel points until you're ready to travel again. With most travel rewards credit cards, you get the highest value for your points by redeeming them for travel. If you can wait, it makes sense to do so.
Another benefit of saving your points for travel is that you might find more deals available than usual. Travel demand has dropped significantly and likely won't return to pre-pandemic levels for years. As such, you may find it easier to book award airfare or hotel stays than you would've in the past.
On the other hand, you might either need or want to get some value from your travel rewards right away. In that case, if you don't want to book travel, you'll need to find a different way.
Multiple card issuers, including Chase and Capital One, are allowing travel cardholders to redeem points toward everyday purchases for a limited time. Cardholders get the same value for their points as they would on bookings with the card issuer's travel portal.
So if you have credit cards that qualify, you can apply your points as a statement credit toward everyday purchases and get the same rate that you would on travel. It's an excellent way to receive full value for your points without needing to go anywhere.
Eligible purchases vary depending on the card issuer. However, we've seen these spending categories include grocery stores, dining, and streaming services.
If you are struggling to make ends meet, you may need to use travel points toward your regular expenses. In that case, gift cards may be a better deal than cash back. Some credit cards offer better value per point on gift card purchases compared to cash back redemptions. There may also be promotions with specific retailers where you can buy gift cards at a discount.
Gift cards are rarely the best way to redeem travel points because you're unlikely to maximize their value. But if money's tight, you could use points to purchase gift cards at stores where you normally shop.
The last option is to redeem your travel rewards for cash back. This redemption method will probably give you the least value, as travel cards aren't intended to be used like cash back cards. With most travel cards, you'll get less than $0.01 per point on cash back redemptions.
Of course, if you need the money, then it makes sense to cash in your travel points. Just make sure you look into all your options first. If your card issuer will let you use travel points toward everyday purchases or to buy gift cards, it could be a better way to go. And if you have a Citi card, you should know that you can currently use ThankYou points to cover your minimum payments, and it'll give you better value per point than redeeming them for a standard cash back statement credit.
How you use your travel points comes down to how quickly you want to use them and whether you need them to cover regular expenses.
If you're in no rush and you don't need to cash them in, it's best to redeem them for travel, either now or later. But if you can't wait, then you should check the redemption options that your credit card currently offers and pick the one that both works for you and offers the most value.
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