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Award travel is the favorite way for many to redeem credit card points. As you’re likely canceling your travel plans for most of this year, gift cards might be an attractive alternative. But should you redeem your points for gift cards or something else? Here are several aspects to ponder.

bank rewards, credit card points for gift cards
You may buy gift cards on sale to make each Chase Ultimate Rewards worth at least 1 cent each.

What Are Credit Card Points Worth?

The redemption value for each point is probably the most critical factor when deciding how to redeem your credit card points. Most points are worth one cent each, making 1,000 points worth $10 in awards.

Let’s take a glance at how much credit card points are worth for the best credit card rewards programs.

Chase Ultimate Rewards

  • Gift cards: 1.0 cents each
  • Award travel: 1.0 to 1.5 cents each
  • Cash statement credits: 1.0 cents each
  • Amazon.com shopping credit: 0.8 cents each

The Chase Freedom, Sapphire, and Ink credit card families earn Ultimate Rewards points. Gift cards cost 1,000 points per $1 in gift card balance for over 150 brands.

Some credit cards, including the Chase Sapphire Preferred®, give you a bonus for travel redemptions. For instance, your points are worth 1.25 cents each when booking award travel through the Chase Ultimate Rewards portal. However, each point is only worth 1 cent each for gift cards and cash statement credits.

Chase periodically has gift card sales where each point is worth more than one cent each. These sales are only for select brands, specifically, restaurant gift cards. For instance, instead of needing 1,000 points for a $10 gift card, you may only need 900 Ultimate Rewards.

Related: Best Chase Credit Cards

Chase Ultimate Rewards gift cards, credit card points for gift cards
Chase is offering over 65 digital gift cards during the pandemic. You can receive your card sooner and redeem online instead of going to a physical location. Credit: Chase

American Express Membership Rewards

  • Gift cards: 1.0 cents each
  • Award travel: 1.0 cents each for award flights and between 0.7 and 1 cent each for other options
  • Cover Your Card Charges (cash statement credits): 0.6 cents each
  • Amazon.com shopping credit: 0.7 cents each

American Express Membership Rewards are worth up to 1 cent each for gift cards and booking award flights on AmexTravel.com. You “break-even” if you usually book award flights on Amex Travel.

Gift cards are available for over 80 travel, retail, and restaurant brands. However, you must be careful which gift cards you redeem Membership Rewards for. Your points are worth between 0.7 and 1.0 cents each.

More popular brands like Hilton, Starbucks, Panera Bread, Sam’s Club, and Target are worth between 0.7 and 0.85 cents each. However, each point is worth the full 1.0 cents for gift cards to less common brands like Cost Plus, Old Navy, or Longhorn Steakhouse.

Your points might be worth as little as 0.5 cents each for some cards. This lowest redemption value is when you redeem your Amex points for American Express prepaid cards.

Gift card rewards can be worth more than using your Membership Rewards for covering recent purchases. But, they are still most valuable when booking award flights or transferring to a frequent flyer program.

Related: Best American Express Credit Cards

credit card points for gift cards
Should you use your Membership Rewards for gift cards? Credit: American Express

Capital One Miles

  • Gift cards: 0.8 cents each
  • Travel statement credits: 1 cent each
  • Booking upcoming travel: 1 cent each
  • Amazon.com credits: 0.8 cents each

If you have the Capital One® Venture® Rewards Credit Card or a Capital One® Spark® Miles for Business credit card, you can redeem your miles for gift cards. Cash rewards are your only redemption option for the Quicksilver and Savor card families.

Redeeming Capital One miles for travel is your most valuable option at 1 cent each.

All gift card redemptions make each point worth 0.8 cents for gift cards. Taking a road trip can generate enough travel purchases to redeem your miles for a statement credit.

Related: Best Capital One Credit Cards

Citi ThankYou Points

  • Gift cards: 1.0 cents each
  • Award travel: 1.0 cents each (1.25 cents each for the Citi Premier℠ Card)
  • Cash statement credits: 0.5 cents each
  • Amazon.com shopping credit: 0.8 cents each

With most Citi credit cards that earn ThankYou points, each point is worth 1 cent each for award flights and gift cards. Gift cards are available to a variety of retail and restaurant brands.

Your points are only worth 0.5 cents each for cash rewards and 0.8 cents for merchandise rewards. Finding a gift card you can easily redeem is a worthy award travel alternative.

Related: How much is a Citi ThankYou point worth?

When to Redeem Credit Card Points for Gift Cards

Redeeming points for gift cards can be a good option in these instances.

Each Point is Worth 1 Cent Each

A good piece of advice is to redeem credit card points only when they are worth 1.0 cents each or higher. Gift cards requiring 1,000 points or less per $10 pass this test.

Can Easily Redeem for Purchases

Make sure you get a gift card you’re likely to use quickly or give as a gift. Getting a gift card to a brand you rarely visit means you’re more likely to put your card into a drawer and forget about it.

Cash Rewards are Unavailable

Your credit card may not offer cash rewards or cash statement credits. Gift cards are the next best cash alternative if you don’t want to redeem them for travel rewards or merchandise.

Can Use for Online Purchases

Due to social distancing, more credit cards are issuing digital gift cards. This can be good if you shop online at this store. Gift cards usually require fewer points than online shopping credits too.

Closing a Credit Card

You should redeem your points before canceling a credit card to avoid losing the remaining balance. Even if you have an undesirable redemption value, gift card rewards are better than nothing.

When to Avoid Gift Card Rewards

There are times when gift cards don’t make sense.

Cash Rewards Are Worth the Same

If cash rewards require the same number of points as gift cards, you can choose cash. Your credit card may let you get a cash statement credit or bank account deposit. Either option essentially puts your money into your wallet as soon as you complete the redemption.

With gift cards, you must still redeem the card for a purchase to enjoy the savings. Forgetting to redeem the card means you pay for the entire purchase with cash instead of cash and points.

Insufficient Points Balance

Gift cards usually require a minimum $10 rewards balance. Some of the more desirable brands may cost $25. The exact price depends on the brand and which credit card rewards program you use.

If you only have a few dollars, getting cash rewards can be better when you can redeem your full balance.

Narrow Selection

A gift card may seem worthless if you cannot redeem it. For instance, you may not patronize the retail and restaurant brands available to you. As many businesses temporarily close during this pandemic, you may be waiting a long time for a store to reopen so you can use your card.

You’re Patient

If you are a value optimizer and have a lot of patience, waiting out the current events can be your best move. In time, you might be able to redeem your points for flights or transfer to airlines to get at least 1 cent per point.

There’s also the possibility that other credit cards will adopt a feature similar to Chase’s Pay Yourself Back tool. Through the end of September 2020, Chase Sapphire members get a 25% or 50% redemption bonus on qualifying grocery, dining, and home improvement store purchases. These members can redeem Ultimate Rewards points for a statement credit to erase recent purchases.

The Chase Pay Yourself Back tool is an easy way to use your points. Credit: Chase

Summary of Should You Redeem Credit Card Points for Gift Cards

Redeeming credit card points for gift cards is a good option if you need the funds right now to avoid paying cash for a future purchase. However, cash rewards or travel rewards give you significantly more mileage with some loyalty programs. As always, research your options and decide how soon you must use your points.

FAQs

What is the best way to redeem credit card points?

The most valuable redemption option for most travel credit cards is booking award travel. Depending on the card, you can either book upcoming award flights or transfer your points to a frequent flyer program to get the highest value. Some cards offer travel statement credits where each point is worth 1 cent each for any recent travel purchases, including flights, hotels, or rental cars.

Cash back credit cards typically make your points most valuable for cash statement credits or bank account deposits.

Chase Ultimate Rewards points are worth the same for award travel and cash rewards. However, most credit cards make each point worth less than one cent each for gift cards and online shopping credits.

What gift cards can you get with Chase rewards?

Chase Ultimate Rewards are worth one cent each (1,000 points=$10) for over 150 brands. These brands are in the retail, restaurant, subscription services, and travel categories.

Gift cards start at $5 (500 points) up to $100 (10,000 points), depending on the brand. Some of the potential $5 gift card options include:

  • Burger King
  • Cold Stone Creamery
  • Red Robin
  • Starbucks
  • Subway
  • Bath & Body Works

Most brands have a $10 or $15 minimum card balance to start redeeming points.

What happens when you redeem credit card points?

Your bank converts the credit card points you redeem into your requested award. In most cases, you redeem the points on the credit card rewards portal for travel, cash, gift card, or merchandise credits. You will see the redemption value for your points, and you must confirm your selection.

If transferring your credit card points to an airline or hotel loyalty program, it can take several minutes or up to one week to complete this transfer. These transfers are irreversible once you confirm your transfer request with the credit card company.

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Josh Patoka
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