There are tons of benefits to shopping with a credit card. You don’t need to carry cash, you can build your credit by making on-time payments, and cards help you sync your spending with your budget thanks to slick financial planning apps like Mint or You Need a Budget (YNAB).
And of course—spending with a credit card can earn you points! From air miles to groceries to discounts at the pump, credit card points represent an all-too-rare opportunity where you really can spend money to make money.
Ready to become an expert at point redemption? Here’s a few things to keep in mind if you want to get the most value from your credit card points.
Know Your Categories
Every credit card with an earn-and-redeem mechanism has its own special rules on what a point is worth. Usually, this is divided by categories: so spending on travel might earn you three points, while spending on groceries earns you two. Some cards also rotate categories, meaning that for a limited time points take on a higher value for certain purchases.
Sit down with each of your credit cards and make sure you know what kind of spending will earn you the most points across different categories. Then, crunch the numbers on redemption value. You might find that your points are worth more if you’re redeeming a travel experience, but less if you’re choosing to convert those points to cash. Keep this information in a handy location and refer back to your research any time you’re considering a credit card point redemption!
Pay for Travel on Points
Speaking of categories, here’s one to pay attention to: the travel category. The credit card points ecosystem was built from partnerships between airlines and credit cards, so even though points can be used in a number of ways, you’ll often find that travel is where you can get the most value for your points. This is even backed up by research, which shows that airline bookings offer the most cents per point when it comes to credit card redemption opportunities. In other words, anytime you’re booking flight tickets: try to do it with points!
Check Expiry Dates
Some credit card points have a use-by date, so it’s important to read the fine print. If you’re not able to use your points before they expire, consider gifting them to a friend or family member, or converting them into cash if possible.
On the other hand, if your points don’t expire, don’t feel obligated to save them up for a rainy day. It’s OK to redeem your points as often as you like! In fact, because the value of points tends to decrease over time due to inflation, it’s actually a good idea to regularly redeem your credit card points. Just be sure to follow the advice above and assess the value of your points relative to various categories, so you’re getting the most bang for your buck.
Look Beyond Points
While considering how to make the most of your credit card points, also be looking beyond points alone. Many rewards cards that earn you points will also offer extra benefits, like airport lounge access, shopping discounts from certain retailers, or free trial periods from various services—from streaming, to grocery delivery, to rideshare programs. Check out what’s available on your card, while keeping in mind that accessing such perks might come with a higher monthly or annual fee.
Remember Your Debt
Points and rewards are fun, but the first rule of credit cards is still to pay off your balance as soon as possible. Remember that if you’re in the red, you can’t use points to cover interest or lower your credit card balance. Should you find yourself with a mounting credit card bill, stop worrying about earning and redeeming points, and instead focus solely on bringing down your balance so you’re not shelling out for interest payments every month. Plus, less debt means a better credit score, so you can qualify for better cards with better terms and point-based rewards in the future!