4 Things to Do with Your Points Each Month

May 6, 2017

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Credit cards offer loads of rewards, but a new report from Bankrate.com highlights that many consumers don’t understand how to navigate the world of points. The survey of more than 1,000 American adults revealed that 31% of credit cardholders have never redeemed their reward points. Why are so many cardholders hoarding their points? While the research didn’t offer insights into why so many respondents aren’t bothering to actually use the rewards they’ve earned, many of them are sitting on points that can power their way to vacations, gift cards, statement credits and a range of other pretty awesome perks. If you’re one of those who’s waiting, here’s a look at four steps you should regularly take to make sure you’re maximizing the value of your points.

1. Pay Down Your Balance

Using your points to decrease your monthly balance may not sound like the most exciting way to put credit card points to work. However, if you’re carrying any amount on your card, you’re not actually rewarding yourself. Why? Because the typical 1-2% reward rate is blinding the reality: The card issuer is winning thanks to the 15% finance charges you’re paying on the balance.

2. Set a Goal

If you really want to put your points to work, think about where your dream vacation spot would be. Now, start earning the points to get there. Image courtesy of Julia Sudnitskaya via Getty Images.
If you really want to put your points to work, think about where your dream vacation spot would be. Now, start earning the points to get there. Image courtesy of Julia Sudnitskaya via Getty Images.

Okay, if you’re not carrying a balance, you get an A+ in the credit management department. Now, you can focus on the real fun. For me, that means planning for an awesome vacation. (I’m actually gearing up for a trip to Palm Springs in a few weeks, and I paid for flights for my wife and myself — a value of more than $900 — with points from my Chase Sapphire Preferred Card.) For others who aren’t looking to travel, saving points might pave the way toward buying a new iPad or paying for holiday gifts for co-workers. Whatever you want to do, know how many points it will take you to get there, and outline opportunities to accelerate reaching your goal such as signing up for bonus opportunities.

3. Watch Your Online Points Portal

Banks regularly add promotions to incentivize customers to pay for purchases directly through their points portals. For example, in March, Chase offered 10x cash on hotels and rental cars booked directly through the Ultimate Rewards portal. Taking advantage of the bonus helped customers earn up to $250 cash back. If converted to Ultimate Rewards points — rather than cash back — these points are even more valuable. Translation: Make sure to pay attention to the emails you receive from your bank, or log in to the points portal on a regular basis to stay in the know.

The other reason to keep a close eye on your points portal: Your rewards opportunities may be regularly changing. For example, Chase Experiences may offer tickets or VIP access to your favorite band. If you aren’t monitoring the additions to the Ultimate Rewards portal, you may be too late to secure seats.

4. Compare Your Transfer Options

Chase has plenty of transfer partners to utilize for flights and hotels outside of the United States.
You may find some ways to supersize the value of your points by transferring them to a travel partner.

If you’re looking to travel, the best option for maximizing the value of your points might involve transferring them to another partner instead of booking directly through your card portal. Check out TPG’s most recent rundown of point valuations among air carriers, hotels and credit cards, but keep in mind that you’ll need to crunch the numbers of your individual situation to make sure you’re getting the best deal. For a rundown of some examples of how travelers can get a lot more than the 2.2-cent current valuation of Chase Ultimate Rewards, check out some of these examples of first-class flights and stays in luxurious suites around the world.

Bottom Line

Whatever you do, resist the urge to watch your rewards points tally climb higher with the psychological satisfaction that you have hundreds of thousands of points sitting in your account. Because as the number of your points increases, the value of each individual point is most likely going down. Check out “Why Points and Miles Are a Bad Long-Term Investment” for some helpful reminders on recent examples of devaluations.

Featured image courtesy of Miha Pater via Getty Images.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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