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How Minimum Redemptions Can Devalue Credit Card Rewards

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credit card rewards redemption

Think of it as a Zen koan: If you’ve earned rewards on your credit card, but you can’t redeem them, are they rewards at all?

A minimum redemption — a requirement that you earn a certain amount of rewards on your credit card before cashing in — can make it hard to get your money’s worth on earned points, miles or cash back. Depending on a card’s rewards rate and minimum redemption, you may have to spend thousands of dollars before you can redeem any rewards.

The problem is, minimum redemption terms can be difficult to find when you’re looking to apply for a card. While credit card issuers are required by law to prominently disclose APRs and fees in what’s called a Schumer box, they aren’t obligated to disclose minimum redemptions the same way. Sometimes, you need to contact the issuer directly to find out.

Why minimum redemptions matter

Minimum redemptions on credit cards aren’t necessarily deal-breakers, but in some cases, they can lower the effective rewards rate on your credit card.

Take the Blue Cash Preferred® Card from American Express, for example, which has a minimum redemption of $25. If you stopped using the card when your rewards balance was at $10, you wouldn’t be able to cash in on those earnings unless you spent at least $250 more. That’s assuming you could earn the highest possible rewards rate — 6% back at U.S. supermarkets on up to $6,000 in spending — on all your purchases. You might have to choose between losing out on those rewards, or holding onto a card that no longer fits your spending habits.

For big spenders or people who use a particular card regularly, such a restriction probably wouldn’t be an issue. But for people who spend more slowly, restrictions on redemptions can make the card less valuable.

Minimum redemptions: Key findings

NerdWallet identified the minimum redemptions on more than 30 credit cards by looking at the cards’ terms and conditions or contacting customer service representatives. We then calculated the minimum amount of spending you’d have to put on each card to before you’d be able to redeem your rewards.

Here’s what we found:

  • Discover has no minimum redemptions for cash-back rewards and travel statement credits. Capital One doesn’t have minimum redemptions for travel statement credit that cover full purchases and cash-back, but requires a minimum of 2,500 miles for partial travel statement credit redemptions.
  • Among issuers surveyed, Barclaycard had the highest minimum redemption requirements. Sign-up bonus aside, you’d have to spend $5,000 on the Barclaycard Arrival Plus® World Elite Mastercard® before you were able to redeem your miles for travel statement credit. You’d have to spend $3,333 before earning enough cash back to redeem on the Barclaycard CashForward™ World Mastercard®.

A full list of our findings and methodology is below.

Minimum redemptions on cash-back cards

Credit CardMinimum redemptionAmount of spending required to meet minimum redemption*
*Rounded to nearest dollar. Does not include sign-up bonuses or limited time offers. Calculated using the highest possible rewards rate on each credit card.
Capital One® Quicksilver® Cash Rewards Credit Card $0Not applicable
Capital One® QuicksilverOne® Cash Rewards Credit Card $0Not applicable
Discover it® chrome $0Not applicable
Discover it® - Cashback Match™ $0Not applicable
U.S. Bank Cash+™ Visa Signature® Card $0Not applicable
Chase Freedom® $0 for travel, cash back and Amazon.com / $5 for gift cards
(In August 2017, Chase eliminated minimum redemption for cash back; previously, the minimum was $20)
Not applicable for travel, cash back and Amazon.com / $100 for gift cards
Blue Cash Preferred® Card from American Express$25$417
Bank of America® Cash Rewards Credit Card $25$833
Blue Cash Everyday® Card from American Express$25$833
Citi® Double Cash Card – 18 month BT offer$25$1,250
Cash Rewards $25 $1,250
Cash Rewards $25 $2,500
Cashbuilderr Visa $50 $2,857
Barclaycard CashForward™ World Mastercard® $50 $3,333

Minimum redemptions on other cards

Credit CardMinimum redemptionAmount of spending required to meet minimum redemption*
*Rounded to nearest dollar. Does not include sign-up bonuses or limited time offers. Calculated using the highest possible rewards rate on each credit card.
Capital One® Venture® Rewards Credit Card0 milesNot applicable
Capital One® VentureOne® Rewards Credit Card 0 milesNot applicable
Discover it® Miles 0 milesNot applicable
Chase Sapphire Preferred® Card 0 points for travel and Amazon.com / 500 points for gift cards / 2,000 points for cash backNot applicable for travel and Amazon.com / $250 points for gift cards / $1,000 for cash back
U.S. Bank FlexPerks® Travel Rewards Visa Signature® Card – 20,000 Bonus FlexPoints 0 points for travel / 5,000 points for merchandise, gift cards and statement creditsNot applicable for travel / $1,667 for merchandise, gift cards and statement credits
Citi ThankYou® Premier Card 100 points$33
PenFed Platinum Rewards Visa Signature® Card 1,000 points$200
Barclaycard Rewards MasterCard® 1,000 points$500
Wells Fargo Propel 365 American Express® Card 2,500 points online/ 2,000 points at the ATM$833 online, $667 at the ATM
Wells Fargo Propel World American Express 2,500 points online/ 2,000 points at the ATM$833 online, $667 at the ATM
Union Bank American Express Card 2,500 points$833
Barclaycard Arrival™ World MasterCard® 2,500 miles$1,250
NFL Extra Points Credit Card 2,500 points$1,250
Bank of America® Travel Rewards Credit Card 2,500 points$1,667
The Amex EveryDay® Preferred Credit Card from American Express 5,000 points$1,667
Premier Rewards Gold Card from American Express 5,000 points$1,667
The Amex EveryDay® Credit Card from American Express 5,000 points$2,500
The Platinum Card® from American Express 5,000 points$2,500
Barclaycard Arrival Plus® World Elite Mastercard® 5,000 miles for cash back/ 10,000 miles for travel statement credit$2,500 for cash back/ $5,000 for travel statement credit

Current as of December 11, 2015.

The bottom line

Before choosing a rewards credit card, ask yourself whether a steep minimum redemption might prevent you from cashing in on all the rewards you’ve earned. Consider your exit strategy, that is, what you’ll do with your rewards if you decide to stop using the account. If you think a minimum redemption could keep you from your rewards, consider another credit card.

Remember, a high rewards rate on a credit card is only the beginning of a story. Its minimum redemption is the often-overlooked, but crucial, next chapter.

Methodology

In this survey, we focused our search on cards that offer cash-back or travel statement credit options. After identifying the minimum redemptions on these cards, we divided the minimum redemption amount by the highest possible rewards rate to find the minimum spending needed to redeem rewards. We excluded sign-up bonuses and limited time offers.

For the Blue Cash Preferred® Card from American Express, for example, which has a $25 minimum redemption and offers 6% cash-back at U.S. supermarkets on up to $6,000 in spending, the math is as follows:

($25 / 0.06) = $416.67 minimum spending needed to redeem rewards.

Note that if you made purchases that weren’t supermarket purchases, you’d have to spend more before earning enough rewards for a redemption.

Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.