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It’s not uncommon to receive a notice from your rewards credit card that seems like great news. I’m talking about all of the announcements that offer cardholders new and purportedly exciting ways to redeem your points and miles, such as for merchandise, event tickets or other experiences.
But too often, these announcements fail to disclose exactly how many points or miles you’ll have to redeem, which would tell you how much value you’d receive from the rewards. And as I frequently remind people, how you redeem our rewards is at least as important as earning them in the first place.
Those who do the math often realize that these partnerships don’t offer a very good way to redeem their rewards.
Redemptions to avoid
Here are some examples of newer ways you can redeem your rewards, but definitely shouldn’t:
Chase and Tock
Chase recently announced an “expanded relationship” with Tock, a reservations platform that allows you to book, and sometimes prepay for, high-end dining experiences. At first glance, redeeming Ultimate Rewards® points for these meals could potentially be a good deal for Chase Sapphire, Freedom and Ink cardmembers.
But when I linked my Chase Sapphire Reserve® to my Tock account and tried to prepay for a meal, I was informed that my 79,015 Ultimate Rewards® points were worth just $632.12 as statement credits toward Tock purchases. It’s only when I break out my calculator that I realize I’d be receiving just 0.8 cent in value per point redeemed.
To put this in perspective, Chase Sapphire Reserve® cardholders can always redeem their points for 1.5 cents each toward travel reservations made through Chase, and points can potentially be worth much more when transferred to airline miles or hotel points with Chase’s travel partners. If I wanted to purchase a dining experience from Tock, I’d be much better off redeeming my Chase Ultimate Rewards® points for a mere 1 cent each as cash back, and then charging the reservation to my card — ending up with 25% more cash than if I used the Tock redemption.
Thankfully, a Chase spokesperson informs me that in the coming months Chase will integrate Tock’s reservation platform into Ultimate Rewards® via a new dedicated Ultimate Rewards® dining tab. This will allow cardmembers access to the Chase Private Dining Series, and hopefully will offer better value per point redeemed.
Amazon Shop with Points
There’s no avoiding Amazon, the world’s largest online retailer. But even though you can use your credit card rewards to make purchases, you definitely shouldn’t. Amazon partners with American Express Membership Rewards, Chase Ultimate Rewards® and Citi ThankYou points, but it offers terrible value per point redeemed. You get 0.8 cent in value for each of your Citi ThankYou points and Chase Ultimate Rewards® points, and just 0.7 cent from American Express Membership Rewards.
Instead, all of these reward points are worth a bare minimum of 1 cent each when redeemed for cash back or numerous other options, and potentially much more when transferred to airline miles or hotel points. Only the Discover cards offer you rewards parity at Amazon; you receive $1 worth of credit at Amazon for every dollar of cash back you’ve earned from your Discover card.
Merchandise awards from United and others
The idea of redeeming your points and miles for merchandise can sound fun, especially when you’re craving a gadget that’s just out of your reach. For example, here’s a Bose QC35 Series II Wireless Noise Cancelling Headphones set offered by United for 51,800 miles. But since these headphones normally sell for $349.95, you’re getting just 0.68 cent per mile. To put this in perspective, you can often book two round-trip domestic award tickets for that price (which would usually be worth about twice as much as the headphones).
In fact, just about any airline and hotel program that offers merchandise awards gives you only a fraction of the value that you can receive when you strategically redeem your miles for award flights or your hotel points for free night stays.
A nice exception
Hyatt and Lindblad
In 2019, Hyatt announced a partnership with Lindblad Expeditions that offers voyages on smaller ships to some exotic and hard-to-reach destinations. I was immediately skeptical when it was announced that guests could redeem their World of Hyatt points for these voyages, but I was pleasantly surprised to find that points were worth a healthy 1.6 cents each toward these awards. In fact, World of Hyatt members also receive special benefits including a $250 onboard credit per reservation, and ship-board nights count toward elite tier status, both of which make this a valuable use of your points.
How to tell if you are getting good value from your points or miles
Finding the value of your points and miles isn’t that hard, but you do need to do a little work. First, figure out the value of the award. If it’s merchandise, travel reservations or event tickets, find out exactly how much it would cost you if you paid cash. This allows you to take into account available discounts, or the possibility of taking a budget carrier to your destination.
Then, simply divide the dollar value of the award by the number of points or miles required, which will tell you the number of cents per point or mile that you’re receiving. To put it into perspective, you can compare it to NerdWallet’s point and mile valuations.
But keep in mind that all valuations are estimates, and there’s nothing wrong with redeeming your rewards for slightly less than they’re worth, especially when you have a large balance that you’re not using. You just don’t want to redeem your rewards for far less than they are worth, and definitely not less than the amount of cash back you could have redeemed them for.
The bottom line
It’s usually better to have more options than fewer, but when it comes to redeeming your rewards, that’s not always the case. When a company offers you a seemingly great way to redeem your rewards, but only gives you a fraction of their actual value, just move along. There are plenty of fantastic ways to maximize the value of your points and miles without being tempted by the latest big announcement.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card
Planning a trip? Check out these articles for more inspiration and advice: Find the best travel credit card for you 4 ways to quickly rack up miles for your next flight How to redeem Hyatt points for maximum value