With two in five Americans planning to spend less this holiday season, creative ways to buy gifts without spending cash are likely on the minds of millions of shoppers.
Credit card rewards programs are one such way. They give you the opportunity to redeem cash, points, or miles you’ve earned from spending on a variety of gifts, including cash, gift cards, merchandise, and travel.
However, redeeming your credit card rewards can be a unique experience if you haven’t done it before, as rewards programs from major issuers like Chase, Capital One, and Bank of America often have rewards portals with redemption options.
Knowing which redemptions offer the best value can help you get the most bang for your buck and get that perfect gift.
travel
Many general credit card rewards programs allow you to transfer your points or miles to a travel partner. Some hotel and airline travel usually offer rewards cards as well. If you have a hotel or airline rewards card, the points or miles you earn are usually automatically transferred to your hotel or airline account.
If your card is a generic rewards card that isn’t specific to a specific travel brand or hotel, it’s a little harder to earn points for a hotel or airline. However, you have the freedom to transfer points to any brand that your rewards program works with, rather than a single brand.
For example, the Chase Ultimate Rewards program allows Chase Sapphire Preferred and Reserve cardholders to earn points and transfer them to hotel and airline rewards programs such as Southwest Airlines, JetBlue Airways, Hyatt and Marriott.
According to personal finance site CreditKarma, using your rewards for travel is usually the most valuable compared to other options like turning points into cash, purchasing gift cards or purchasing merchandise. In fact, giving someone 10,000 World of Hyatt points is worth an average of $164, Credit Karma noted.
The trick to awarding travel rewards is to get the points or miles credited to the recipient’s account. According to the experts at the AwardWallet loyalty program, the following travel brands allow you to gift points from your loyalty account to someone else’s account:
- Hilton honors
- IHG One Rewards
- Marriott Bonoway
- world of life
- Border Airlines
- Hawaiian Airlines
- Jet Blue
- Spirit Airlines
- United Airlines
Each of these programs has limitations and restrictions, so make sure you understand them before transferring rewards.
If you’re not sure whether your recipient prefers airline or hotel points, you have another option for transferring points.
If you and your recipient are part of a credit card rewards program, chances are the card issuer will let you transfer points to their account so they can use them however they want.
Gift cards
A recent survey from Wells Fargo found that gift cards are the top choice for current recipients, increasing physical gifts by 56 percent to 55 percent.
Most credit card rewards programs allow you to redeem your points or miles for gift cards. The process is usually easy – open your rewards portal, search for the gift card you want to buy, and then redeem your points for a card purchase.
You can usually choose from a wide variety of dining and shopping options such as Target, Apple, Sephora, Nordstrom, and Chipotle.
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While gift card redemptions don’t offer nearly the average value that travel redemptions do, they may be worth more than redeeming for cash. In many cases, your credit card rewards portal will sell certain gift cards for 10% off.
So, if you normally need 10,000 points for a $100 gift card, you only need 9,000 points. That’s well below the $174 average value you’ll get for Hyatt transfers, but higher than what you’ll get for cash redemptions (typically $100 for 10,000 points).
cash
Cash is the one gift your friends and family most likely want but are too embarrassed to ask for.
In fact, 65 percent of people like receiving cash because they can use it to buy what they want, and 36 percent like cash because they don’t like most of the physical gifts they receive during the holidays, Wells Fargo noted.
In most cases, it only takes a few clicks to redeem your points for cash. Generally, you can redeem at a rate of one cent per point, meaning 10,000 points are worth $100 in cash.
Additionally, some credit cards, such as some Capital One and Chase cards, allow you to apply the cash value of your points to past purchases.
