Maybe you’re contemplating turning your credit card points into a Lowe’s gift card for your brother this December. After all, he’s in the middle of renovating his house.
But not so fast. Gift cards are a simple way to redeem your rewards, especially during the holidays, but turning your points into plastic won’t necessarily get you a good deal.
Consider the drawbacks: On top of the fact that people tend to lose or forget them, gift cards often have a low redemption value — generally one cent (or less) per point or mile. (You should strive for at least one cent per point or mile.)
There’s also a chance they’ll arrive too late for the holidays. Some issuers send physical gift cards, which might take awhile to reach your mailbox.
And gift cards offer fewer benefits and consumer protections than credit cards. For example, if you book a trip on a gift card from a travel company, you could miss out on the trip cancellation insurance many credit cards provide.
Here’s what you should do instead: Redeem your points for cash back and find a good deal on a gift — or forgo gifts altogether and save your points to book your holiday trip. If you don’t have enough to cash out or use for travel, find out if you can redeem rewards directly with a partner site, such as Amazon.
You can also combine points and cash to save on a trip while still getting a good value. Try transferring your points to a loyalty program, particularly one that offers 1:1 redemption.
Any of these options will likely get you more value than converting those hard-earned points into a gift card. (And your brother can’t forget to use them.)