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Published October 19, 2021
Updated October 19, 2021

How to Maximize Your Use of Credit Card Points

Make the most of your credit card points by calculating the highest-value redemption option and using them before they expire.

Earning credit card points is fun, but redeeming your points to get discounts or free stuff like travel, gift cards, merchandise and more, is truly satisfying.

No matter what type of rewards card you have, knowing how credit card points work and strategic ways to make use of them will help you keep more money in your pocket and maximize your perks.

» MORE: Not into points? Check out the best cash-back credit cards in Canada

1. Know how credit card points work

With most rewards credit cards, you’ll earn points with every purchase time you make a purchase, you’ll earn some points. Some purchases earn you more points than others, and you may also be offered a welcome bonus worth thousands of free points when you apply for a new credit card or make your first purchase.

Points can then be redeemed for free stuff depending on the type of credit card you chose. For example, a travel card may allow you to redeem your points for free flights or hotel stays, whereas a general rewards card may let you exchange points for free gift cards or merchandise.

» MORE: How to apply for a credit card

2. Calculate the value of your credit card points

To make the most of your credit card points, you need to figure out the value of a point, or what each point is worth in Canadian dollars. This will make it easier for you to compare different redemption values so you can make the most of your rewards.

Some credit card issuers make it easy. For example, you might be able to redeem 10,000 points to get $10 off groceries. Alternatively, a travel rewards program may allow you to redeem 1,000 points for $1 off a travel purchase. In both cases, one point has a value of one cent.

But it’s not always that easy. Since not every redemption program uses nice round numbers, use the following formula to figure out the value of one point:

Cash value of the redemption x 100 ÷ number of points required = value per point

So let’s say your travel rewards program will charge you 23,000 points for a round-trip flight between Toronto to Vancouver that would otherwise cost $489. Your formula would look like this:

$489 x 100 ÷ 23,000 = 2.13 cent value per point

Note that if you’ll need to pay any additional fees or taxes on top of your points redemption, you would not include them in the redemption value since you’ll pay them out of pocket. However, you would add the taxes to your calculations when redeeming points for a product that you would typically pay taxes on.

Let’s say you live in Ontario, for example, and you want to use 20,000 points for a blender that retails for $149.99 plus tax. Since the tax rate is 13% in Ontario, you would add that to the retail price when determining the blender’s value. In this case, it’s $169.49. Your formula would then be:

$169.49 x 100 / 20,000 = 0.85 cents per point

If you were deciding whether to redeem your points for the flight vs. the blender, these calculations make it easy to see that the travel redemption yields a much higher value per point.

» MORE: How to use a credit card like a pro

2. Understand your credit card point redemption options

What you can redeem your credit card points for depends on your card and loyalty program. It’s always worth looking into the details of the program before signing up for a rewards credit card. Some common types of credit card rewards include:

  • Travel: This could include flights, hotels, and even car rentals.
  • Gift cards: Most loyalty programs allow you to redeem your points for gift cards at various merchants.
  • Merchandise: There’s often an online catalogue with hundreds of items you can buy with points. Some programs even allow you to redeem groceries.
  • Events: Some programs allow you to redeem your points for tickets to concerts or sporting events.
  • Statement credit: Use your points to pay down your balance.
  • Financial products: A few programs allow you to turn your points into cash, which is then deposited into an investment account.
  • Charitable donations: Some loyalty programs allow you to donate your points to partner charities.

» MORE: Rewards credit cards vs. cash-back credit cards

4. Be aware of point expiration dates

Travel rewards points typically expire after a certain amount of time if you don’t use your account regularly. For example, many travel credit card programs state that your points will expire after 18 to 24 months of account inactivity. However, all it takes to reset that calendar is a single transaction.

If you have a rewards credit card issued by a bank, your points typically won’t expire as long as your card is active and in good standing. If you’re worried about paying the annual fee on a card you don’t use that often, you might choose, or consider switching to, a no-fee credit card.

Other smart ways to use credit card points

  • Transfer your points: Some credit card points can be transferred to other travel loyalty programs, where they may even be worth more.
  • Get to know your loyalty program: Most rewards programs have a sweet spot where your points could be worth more, such as an online store or a particular hotel chain.
  • Seek out limited-time promotions: Many loyalty programs run occasional promotions where you’ll get a discount on specific redemptions. For example, gift cards may require 30% fewer points.
  • Wait for a dream redemption: Instead of using your points as soon as you can, consider saving them up for a reward that requires a lot of points, such as a business class flight, which may be worth more to you.

About the Author

Barry Choi
Barry Choi

Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.

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