Redeeming credit card points for cashback or transferring them to travel partners are both popular options for using your credit card rewards. Which is the better choice for you?
In this blog post, we’ll compare the pros and cons of each option to help you decide which method is right for your spending habits and travel goals. Redeeming points for cashback is a simple and flexible way to use your rewards, but transferring them to travel partners can often offer higher value.
We’ll explore the advantages and disadvantages of each option in detail to help you make an informed decision.
Redeem credit card points for cashback
Redeeming credit card points for cashback is a simple and straightforward way to use your rewards. Many credit cards allow you to redeem your points for statement credits, which can be applied to your account balance or used to pay for purchases. You can also redeem your points for direct deposit into your bank account or for gift cards or merchandise.
Pros
The main advantage of redeeming points for cashback is that it’s easy and flexible. You can use your cashback rewards to pay for anything you want, and you don’t have to worry about restrictions.
Additionally, cashback rewards typically have a higher value than other types of rewards, so you may be able to get more value out of your points this way.
Cons
However, redeeming points for cashback also has some drawbacks. For one, the value of your points may be lower when redeemed for cashback compared to other options. For example, if your credit card offers 1 point per dollar spent, and each point is worth 1 cent when redeemed for cashback, you’re effectively earning 1% cash back on all purchases. This may be lower than the rewards you could earn by transferring your points to travel partners.
Another drawback of redeeming points for cashback is that you may not be able to take advantage of bonuses or promotions. Many credit card issuers offer bonus points or miles for transferring your points to travel partners, but these offers may not be available for cashback redemptions.
Also, some credit card issuers may limit the number of points you can redeem for cashback, or require you to have a certain number of points before you can redeem them.
Transfer credit card points to travel partners
Pros
Transferring credit card points to travel partners is another option for maximizing your rewards. Many credit card companies have partnerships with airlines, hotels, and other travel companies, allowing you to transfer your points to these partners at a 1:1 ratio or better. This can be a great way to earn rewards faster and book flights, hotels, or other travel expenses for free or at a discounted rate.
The main advantage of transferring points to travel partners is that you can often get more value out of your points this way. For example, if your credit card offers 1 point per dollar spent, and you can transfer your points to an airline, and you need 100,000 points to book a $1,500 flight, each point is effectively worth 1.5 cents when redeemed for flights. This is a higher value than redeeming your points for cashback and can help you save more money on your travels.
When transferring your points to a certain participating hotel, sometimes you can get a redemption of 2 or even 3 cents per point, which is obviously a way better deal compared to cashback you could have earned.
You can learn more about transferring points to the World of Hyatt hotel program in our post about everything you need to know about booking Hyatt hotels with Points.
Cons
Nevertheless, transferring points to travel partners also has some disadvantages. For one, you may have to put in more effort to find the best redemption options and maximize your rewards. You’ll need to research your travel partners and compare their redemption rates, as well as keep an eye out for promotions and bonuses that can boost your rewards.
Moreover, transferring points to travel partners may be subject to restrictions or blackout dates, so you may not be able to book your desired flights or hotels.
And always keep in mind that most of the time, you need to plan your trip and book your stay way in advance in order to be able to redeem points.
Which credit cards offer the ability to transfer points to travel partners?
There are several credit cards that offer the ability to transfer points to travel partners. One example is the Chase Sapphire Preferred Card, which allows cardholders to transfer their points to a wide range of airline and hotel partners at a 1:1 ratio.
Another option is the American Express Platinum Card, which is part of the American Express Membership Rewards program. This card allows cardholders to transfer their points to a variety of airline and hotel partners, including Delta SkyMiles, Hilton Honors, and British Airways Executive Club.
It’s worth noting that while these cards do offer the ability to transfer points to travel partners, there may be fees associated with the transfer, and certain restrictions may apply. It’s always a good idea to carefully review the terms and conditions of any rewards program before transferring points.
Chase Sapphire Preferred
You can earn a signup bonus of 60,000 Ultimate Rewards Points when you signup for the Chase Sapphire Preferred Credit Card and spend $4,000 in the first three months of card membership. This bonus alone is worth at least $1,200 in travel rewards when transferred to travel partners such as Hyatt!
REWARDS RATE
1x-5x
BONUS VALUE
$1,200
SIGN-UP BONUS
60,000 points
ANNUAL FEE
$95
Bottom Line
In conclusion, whether you redeem your credit card points for cashback or transfer them to travel partners will depend on your spending habits and travel goals. If you want a simple and flexible way to use your rewards, redeeming points for cashback may be the better choice.
However, if you’re willing to put in the effort to research and compare redemption options, and traveling is a big part of your life – transferring your points to travel partners can offer higher rewards and more value for your points.
