With two out of 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 consumers.
Credit card rewards programs are one of those ways. They give you the chance to redeem cash, points, or miles you’ve accumulated from spending for a wide variety of gifts, including cash, gift cards, merchandise and travel.
Yet using your credit card rewards can be an overwhelming experience if you’ve never done it before, as major rewards programs from issuers such as 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 land that perfect gift.
Travel
Many general credit card rewards programs allow you to transfer your points or miles to a travel partner. Certain hotel and airline travel typically offer rewards cards, too. 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 yours is a general rewards card that isn’t exclusive to a certain travel or hotel brand, getting points to a hotel or airline is a little harder. However, you get the freedom of transferring points to whichever brand 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 take points and transfer them to hotel and airline rewards programs such as Southwest Airlines, JetBlue Airways, Hyatt and Marriott.
Redeeming your rewards for travel generally provides the most value compared to other options such as converting points to cash, buying gift cards or buying merchandise, according to personal finance site CreditKarma. In fact, giving someone 10,000 World of Hyatt points provides an average value of $164, Credit Karma noted.
The trick to gifting travel rewards is getting the points or miles to the recipient’s account. According to loyalty program specialists AwardWallet, the following travel brands allow you to gift points from your loyalty account to someone else’s account:
- Hilton Honors
- IHG One Rewards
- Marriott Bonvoy
- World of Hyatt
- Frontier Airlines
- Hawaiian Airlines
- JetBlue
- Spirit Airlines
- United Airlines
Each one of these programs has limits and restrictions, so make sure you understand them before you transfer 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 the same credit card rewards program, there’s a good chance your 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 present recipients, edging out physical gifts 56 percent to 55 percent.
Most credit card rewards programs let you redeem your points or miles for gift cards. The process is typically easy - open your rewards portal, search for a gift card you want to buy and then redeem your points to purchase the card.
You can typically pick from a wide variety of dining and store 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 might offer more than redemptions for cash. In many cases, your credit card rewards portal will sell certain gift cards at a 10 percent discount.
So, if you normally needed 10,000 points for a $100 gift card, you’d only need 9,000 points. That’s well below the $174 average value you’d get for a Hyatt transfer, but above the value you’d get for a cash redemption (typically $100 for 10,000 points).
Cash
Cash is the one gift that your friends and family most likely want but are too embarrassed to ask for.
In fact, 65 percent of people like getting cash because they can use the money to buy what they want, and 36 percent like cash because they don’t like most of the physical gifts they get during the holidays, Wells Fargo noted.
In most cases, it only takes a few clicks to redeem your points for cash. Generally speaking, you can redeem at a rate of one cent per point, which means 10,000 points would be worth $100 in cash.
Additionally, some credit cards, such as certain Capital One and Chase cards, allow you to apply the cash value of your points to past purchases.
This article is sponsored by Credit Karma. We may earn a commission if you engage with their services using links in this article
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