While some cards make it possible to squeeze a lot of value out of each point or mile — the standard bench mark is one cent apiece — some redemption options will give you less.
So when it comes to maximizing your credit card rewards, you don't necessarily need to know all the tricks of the trade. Sometimes you just need to know which redemption options to avoid.
The 6 worst ways to redeem your credit card rewards
Valuing credit card rewards is a tricky game, especially if you have points or miles instead of cash back.
“Reward points don't have any intrinsic value by themselves,” says Jason Steele, a travel and credit card expert. “They're only worth as much as what you can redeem them for.”
If you've been redeeming your credit card rewards in any of these ways, however, you could be leaving money on the table.
1. Cash back on a travel card
Take, for example, the Capital One Venture Rewards Credit Card. The base value when redeeming your miles for travel is 1 cent apiece, and you may be able to get more than that by transferring your rewards to one of the bank's airline partners.
If, however, you use your miles to get a statement credit or paper check, you'll get just half a cent per mile.
The Chase Ultimate Rewards program is an exception to the rule, giving you 1 cent per point if you redeem for cash back. But if you have one of the program's travel credit cards – either Chase Sapphire Preferred Card or Chase Sapphire Reserve card – you can get 1.25 or even 1.5 cents per point when you redeem for travel through Chase, or potentially even more by transferring your rewards to a partner hotel or airline program.
“Early on, before I knew how valuable rewards were, I cashed out all of my Chase Ultimate Rewards points [for $650],” says Brandon Neth, a travel expert at FinanceBuzz. “It could have been redeemed for travel for nearly $975. The worst part is I used the money to buy car parts for a car that I ended up selling a few months later.”
If you want the flexibility of cash back, stick to a cash back credit card.
2. Pay with points
Some rewards programs, including Chase Ultimate Rewards and American Express Membership Rewards points, allow you to use your rewards to shop online directly with retailers.
This arrangement is all about convenience — simply add your card then opt to use your rewards at checkout. The problem is that you'll rarely get even the standard 1 cent per point when using yours this way.
With Chase, for instance, using points on Amazon.com will net you 0.8 cents per point. With Membership Rewards, you'll get just 0.7 cents when using your points with Amazon.com, Best Buy, Boxed, GrubHub and several other retailers.
There are, of course, exceptions. With the Business Platinum Card from American Express, says Steele, you get 35% of your points back when you redeem them for flights with your designated airline, giving you roughly 1.5 cents per point.
Studies show that consumers generally prefer experiences over things, but it can be tempting to use your credit card rewards to get the latest tech or accessories for your travels.
There's really never a good case for using your points to shop catalog items, though. With Amex, for instance, you can get an Apple Watch Series 5 for 85,506 points or $427.53, which includes tax, giving you 0.5 cents per point.
If you have Delta SkyMiles, you could purchase a Kuerig coffee maker for 43,654 miles, or you could purchase it at Best Buy for $199.99. With that redemption, you're getting 0.46 cents per mile.
You can get 1 cent per point when using Chase Ultimate Rewards points to buy Apple products, but that rate lasts only until Nov. 15, 2019, or while supplies last. After that, the rate drops to 0.8 cents per point. But again, if you can get 1.25 cents or more when redeeming for travel, even the standard 1 cent per point isn't enough to make it worth it.
“Understand how much your points are worth on paper by comparing it to the cash price,” says Mark Jackson, personal finance expert at Brad's Deals. “Then, make the decision based on your available options.”
See related: Avoid these 7 hotel rewards mistakes
4. Anything but hotels on a hotel credit card
One of the downsides of having a hotel credit card is that your redemptions options are restrictive, but you should resist the urge to use your points for anything but free stays.
Take World of Hyatt, for example. The hotel rewards program has some of the most valuable rewards currency of any travel program, offering 2 cents per point on average on hotel stays. But if you redeem your points for dining, spa and other on-property credits, you'll get between 0.5 and 0.83 cents per point in value, depending on how many you redeem.
5. Anything but flights on an airline card
As previously mentioned, you can use your Delta SkyMiles to buy a coffee maker at 0.46 cents per mile, or you can redeem them for award flights at 1.61 cents per mile on average.
You can also use your rewards to purchase a membership to the Delta Sky Club, the airline's flagship airport lounge network. But redeeming your miles this way will net you just 1 cent apiece.
6. Transferring to friends and family
Some credit card rewards programs allow you to share your points with other people for free. With Chase, for instance, you can transfer points to a spouse or domestic partner. Amex allows you to transfer rewards to a frequent flyer account in someone else's name, as long as they've been an authorized user on your account for at least 90 days.
If you want to share IHG Rewards Club points, however, you'll pay $5 for every 1,000 points you transfer, or 0.5 cents per point. Since IHG points are worth 0.55 cents apiece on average for free stays, sharing them would effectively neutralize their value.
Also, note that Citi does allow you to transfer points to someone else for free, but you can only transfer up to 100,000 points per year, and shared points expire 90 days after the transfer.
See related: 5 tips for pooling credit card rewards spending
When could a subpar redemption make sense?
While it's always a good idea to try to get as much monetary value out of your credit card rewards, there are situations where it could be worth considering getting less for your rewards.
“When you have more points than you can spend on optimal rewards, then it makes sense to redeem for less-optimal choices rather than spend cash,” Steele says.
The same goes if the alternative is losing them. “If your points are going to expire and you don't have the option to extend their life,” says Neth, “using them to buy merchandise or cashing them out makes absolute sense.”
According to Jackson, though, there are some alternatives. With many programs, you can keep your rewards from expiring with any kind of account activity.
“Maybe earn one point on your credit card or transfer points into the program to prevent miles from expiring,” he says. “If there's a little bit of planning in place, you don't need to redeem your airline miles for magazines or gift cards or something like that.”
As you think about how to use your credit card rewards, try to avoid redemption options that give you less bang for your buck unless there's a good reason. This may give you fewer alternatives, but you could get far more in terms of monetary value.