Woman uses tablet to check credit card rewards

How to Redeem Credit Card Rewards or Points

Last Updated: April 13, 2022
4 min read

Let’s Learn About: How to Redeem Credit Card Rewards

  1. When applying for credit cards, you should try to match your spending preferences with rewards that fit into your lifestyle.

  2. There are many ways to use credit card rewards or points to help you keep your finances in check.

  3. The promise of rewards, cash back, or travel should be no reason to create unmanageable debt for yourself.

Credit card reward programs offer a number of ways to redeem the points or rewards you earn. But how do you decide what’s right for you? Consider these tips to help you make the most of your credit card rewards.

The best ways to redeem credit card rewards or points

Redeem rewards at select retailers

If you are searching for a way to maximize your spending, perhaps during the holidays, look no further than a rewards card. For example, as an added perk to cardholders, some credit card issuers offer the ability to shop online at select retailers and pay for your purchase with points or cash back rewards. For example, Discover Cardmembers can pay with Cashback Bonus® at select merchants.

Earn miles on everyday spending

Redeeming your credit card rewards for travel can make the cost of travel more management. However, depending on the credit card issuer, the need to accrue lots of miles or points before redeeming, blackout dates, and other travel restrictions can make travel redemption frustrating.

Discover Cardmembers have options when they decide to redeem the rewards on their Discover it® Miles card. While they earn 1.5 Miles per $1 spent on all purchases, Miles can be redeemed as cash or as a statement credit towards a travel purchase.1 In addition, Discover Miles never expire2, so saving up to help offset the cost of a dream vacation is a real possibility.

Donate to charity

Another option to consider is donating your points to a charity of your choice (if your credit card issuer allows this). For example, Discover works with various charitable partners so that Cardmembers can donate their Cashback Bonus®. During the holidays and in times of crises or natural disasters, using your rewards points to donate to charity is an extra way to help without having to spend more out-of-pocket. If you plan on making a charitable donation, check to see if your issuer requires a minimum number of rewards points to donate.

Use rewards for cash back or statement credit

Getting an electronic deposit to your bank account or a statement credit is a practical and straightforward way to make your rewards work for you. You could use your rewards and apply them toward your existing balance. If you redeem your rewards for cash,  you can transfer the money into an interest-bearing savings account, retirement account or college savings fund.

How to use the credit card rewards or points you have today

  • Pay off your balance. Avoid the temptation to spend more than you are able to pay back immediately simply to accumulate more rewards. The more you pay in interest each month, the less valuable your rewards become. If you do have an outstanding balance, you may be able to calculate the interest and payoff time of any credit card with online tools, like the Credit Card Interest Calculator from Discover.
  • Focus your spending. It’s easy to become impulsive when it comes to earning rewards. Concentrate your spending on a card that offers the best value in categories where you spend the most, rather than spacing out your purchases across several cards and making it more difficult to earn enough rewards on one card to truly help you.
  • Look for bonus offers. If you are only earning one point for every $1 spent, you could be missing out on rewards. For example, some issuers offer an increased rate in special categories, up to a specified dollar amount. The Discover it® Cash Back card allows Cardmembers to earn 5% cash back on everyday purchases at different places each quarter up to the quarterly maximum when you activate. Plus earn 1% cash back on all other purchases.
  • Estimate your rewards cash value. If your card gives you points, you’ll want to calculate the cash value of those so you can determine the best possible return. You can do this by dividing the cash reward you are trading in for by the number of points it takes to trade in for it. On the other hand, some cards, like those from Discover, offer cash back which needs no point-to-cash conversion.

With any credit card program, it’s important to always read the fine print. Check to see if your rewards program has a spending cap, redemption restrictions or an expiration date. With careful thought and some extra planning, you can find the credit card rewards that are right for your needs and may add up to valuable savings.

The worst ways to redeem credit card rewards or points

Using your credit card to gain points for reward redemption can be a double-edged sword if not done responsibly. While credit card use is the only way to accumulate these points, you want to make sure you’re staying on top of monthly payments to avoid unmanageable debt. Rewards programs are meant to be supplementary benefits to choosing a credit card provider, not a primary means of saving.

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