Stop Making These 4 Mistakes When Collecting Your Credit Card Rewards

I’ve been serious about earning and spending travel rewards points for almost 20 years, so I have a lot of experience strategizing the best way to earn and redeem rewards for maximum value.

I also recommend to other credit card users who want to maximize their credit card travel rewards, which always starts with a review of how they’ve been spending their reward points and miles. Over the years, I’ve noticed many credit card users make the same costly mistakes.

These are the biggest mistakes you’re making when redeeming credit card rewards

When I first review a rewards travel customer’s spending and redemption habits, I often hear that they recently redeemed 100,000 or more of their credit card rewards points for a plane ticket.

I always ask, “So how did you redeem those miles?” The most common answer is that they simply called the card issuer or visited their website to redeem points for a reservation. Others will redeem their points for gift cards or merchandise.

These are the ways I’ve found you are making costly mistakes when it comes to how to redeem your rewards and what you can do to get the most value.

1. Don’t transfer rewards for higher value

If my clients say they redeemed their points for a plane ticket through the issuer, their 100,000 American Express, Citi or Capital One points got them a $1,000 plane ticket. That equals 1 cent for each point.

But they could have done much better by transferring their credit card rewards to airline miles.

Points transfers allow you to transfer your credit card points to an airline or hotel brand’s loyalty program, where they are often worth more than the standard 1 cent per point.

For example, you can transfer 100,000 American Express Membership Rewards points to ANA airlines in Japan and redeem them for a round-trip business class ticket from North America to Europe, operated by any Star Alliance airline, such as United, Air Canada, Lufthansa. and others.

Basically, it comes down to this question: “Would you rather have $1,000 or a business class ticket to Europe?”

2. Not understanding the value of redeeming a credit card through the travel portal

On the other hand, there are times when it makes sense to redeem your points directly at the credit card issuer’s travel agency, but only when you’re getting a lot more than a penny per point.

For example, Chase Sapphire Reserve® cardholders can redeem their points for 1.5 cents each on travel booked through Chase Travel℠, thanks to their 50% points redemption bonus. This is a decent value, especially considering you can also earn miles on tickets you book through Chase.

For perspective, if you had those 100,000 American Express points in the Chase Sapphire Reserve, they would be worth about 150,000 points.

Another specific instance of card you might like to redeem through an issuer portal is with The Business Platinum Card® from American Express. Cardholders receive 35% back in points when they book business or first class tickets through AmexTravel.com and when they book economy class tickets on the airline they have selected for their $200 annual fee credit.

With this 35% cash back, Membership Rewards points redeemed through Amex Travel are worth just over 1.5 cents each (up to 1,000,000 bonus points per calendar year), which can also be a valuable way to redeem your rewards.

3. Transfer rewards to low value partners

Unfortunately, most credit card rewards programs offer some members very low value rewards. Not all transfer partners were created equal – check the value per point you would get before initiating a transfer.

For example, you’re unlikely to get much more than half a cent in value per point from some hotel programs like Hilton and Marriott. A common mistake I see is transferring high-value points like Chase Ultimate Rewards or American Express Membership Rewards to one of these programs at a 1:1 ratio.

Cardholders end up redeeming 100,000 points for a hotel that would have cost $500 a night, which is less than a cent per point. To calculate your value per point, divide the dollar cost by the point cost. In this case, $500/100,000, which is half a cent.

4. Don’t compare prices

Another common mistake credit card users make when redeeming their points is not looking for better, low-cost alternatives.

For example, you can find a good deal on an award seat on a United flight for 12,500 miles. However, if you found a similar flight for $49 with a different airline, spending 12,500 miles on the other would be a misuse of your rewards.

Even if United sells that flight for $200, you’re actually only getting $49 in value, the price of the competing airline’s ticket. Therefore, you would be better off paying cash and saving your miles for an award that offers much more value per mile redeemed.