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Introduction to Rewards Credit Cards

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When should I redeem my credit card rewards?

It’s a personal decision, but there are some things you should keep in mind

Summary

There are no hard and fast rules regarding redeeming your credit card rewards, but you should consider details like expiration dates and if you’re planning on closing the card in the near future.

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Earning credit card rewards is the easy part, but knowing how to redeem them — and when to redeem them — can be a challenge. After all, you may be tempted to redeem your rewards whenever you feel like it, whether you’re cashing in points for gift cards or statement credits on your account.

You may also feel inclined to hoard rewards points for something special, particularly if you’re saving up travel points so you can use them for airfare, a hotel stay or a full-fledged vacation package.

While there is no hard and fast rule that determines the best time to redeem your rewards, there are several factors you should keep in mind along the way. Read on to learn about the best times to redeem your credit card rewards, when to keep saving them and how to decide when you’re on the fence.

When is the best time to redeem rewards?

While the decision to redeem credit card rewards is one only you can make, there are some situations where cashing in definitely makes sense. Just keep in mind that the scenarios below may or may not apply to your situation depending on the rewards credit card you’re using to earn points.

Your rewards points are about to expire

Not all credit card rewards expire, and that’s particularly true when it comes to points earned in flexible programs. For example, Chase Ultimate Rewards points won’t expire as long as an eligible account is open, and the same is true for points earned in the American Express Membership Rewards program.

That said, many types of airline miles and hotel points expire after 12 to 24 months of inactivity, so you should pay attention to the rules of your program. For example, American AAdvantage miles expire if you don’t earn or redeem some miles every 24 months, and the same timeline applies to points in the Hilton Honors program.

You may be able to “reset the clock” on your points or miles by earning more or making a small redemption, and either option is better than watching your rewards haul expire.

Travel redemptions you want are available

If you focus on earning airline miles or hotel points so you can redeem rewards for travel, finding the award space or free nights you want is another reason to redeem right away. After all, many travel loyalty programs have moved away from fixed award charts and toward dynamic pricing, so there’s no guarantee you’ll find availability again for a price you’re willing to pay.

This is especially true when it comes to award flights in premium cabins, award flights on rare itineraries and hotel stays at properties that book up quickly or release limited award nights. If you find what you want and have the rewards to book right away, you should.

You’re going to cancel your credit card fairly soon

When it comes to frequent flyer programs and hotel loyalty programs, your rewards points are held in your loyalty program account regardless of your credit card status. However, other credit cards that earn points in their own programs (e.g. Chase Ultimate Rewards and American Express Membership Rewards) can forfeit your rewards if you close your credit card account.

What does this mean, exactly? If you’re planning on closing a credit card account, you should go ahead and cash in your rewards before you do.

The other option is opening another credit card first that keeps your points alive in the same program. For example, it’s fine to close The Platinum Card® from American Express to avoid paying its $695 annual fee if you have another open Amex credit card that earns Membership Rewards points like the American Express® Gold Card or the Amex EveryDay® Credit Card from American Express.

You found a special offer

Sometimes rewards programs extend special offers that are hard to pass up. For example, Chase Ultimate Rewards occasionally offers discounts for redemptions on Apple products redeemed through their portal, and they frequently discount some of their gift card options by 10%.

If you find a special offer and you have the rewards to burn, you might as well go for it.

You’re ready to splurge

Maybe you just feel like using your rewards for a trip you want or some merchandise you don’t want to pay for in cash. These instances are definitely worth pursuing if you have plenty of rewards points that aren’t spoken for already.

While you can always save up your rewards points or cash back, it never hurts to use them for something you really want. Remember, you can always earn more rewards, either by using your card for regular spending or signing up for a new credit card to earn a big sign-up bonus.

When to save your rewards

Maybe you’re someone who truly enjoys watching your rewards balance grow, or perhaps you have other reasons to keep on saving your points or cash back. Here are a few scenarios in which saving up can make sense.

You’re racking up points for a specific redemption

If you have your eye on a specific rewards redemption, working diligently to boost your rewards balance makes sense. For example, you may want to book an award flight that is normally 50,000 miles, but you only have 30,000 miles in your account. If you continue using your rewards card for regular spending and bills, you will eventually reach that threshold and be in a position to lock your award in.

You want more options later on

Another scenario in which it can make sense to save rewards is if you want to have plenty of options later and there’s nothing you really want to redeem for right now. If you keep earning and saving, you’ll have more and more options to choose from once you’re ready.

Bottom line

No matter what anyone says, you can redeem your rewards any time you want. And while you may want to save up for something special, you should also keep in mind that rewards points are vulnerable to inflation. This means that, like money you earn at your job or keep in the bank, your points and miles can be worth less over time.

Whatever you do, you should take some time to familiarize yourself with the rewards options available to you. From there, you can decide if you have enough to redeem right now or if you need to continue saving for the travel, gift cards or merchandise you really want.

Also,  make sure you’re maximizing your rewards by using the right card for the right type of purchase. By earning and redeeming strategically, you can get more value out of your rewards credit card.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

Credit Card Rate Report
Reward
16.39%
Student
17.07%
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16.04%
Business
14.62%
Cash Back
16.51%

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