How to use points and miles to give gifts with $0 out-of-pocket cost

Each holiday season, some consumers find themselves sitting on rewards at a time when the wallet often feels a bit constrained. It can be tempting to offset a little pain by redeeming a few points on gifts, even if the return per mile is suboptimal compared to when redeeming for travel.

But, this year is different.

For many families, the realities of this year mean there simply isn’t any extra cash for gifts — at all.

However, if you have some points tucked away in various credit card, hotel and airline loyalty accounts, they can serve as a life-line to putting a little magic under the tree.

Here at The Points Guy, we are certainly getting more questions about using points and miles for gifts than before. Many of these readers aren’t interested in giving the gift of travel. They want to give more traditional gifts of toys and gift cards.

For example, TPG’s Summer Hull recently got this message from one of her followers on Instagram:

Do any rewards programs allow you to use points for plain Visa gift cards…I lost my job and am looking for a way to utilize rewards for Christmas giving to kids.

Although the math points to us generally not recommending redeeming points and miles for non-travel redemptions, math means nothing if cashing in some points can be the path to putting smiles on your kids’ faces at the end of a hard, trying year.

If you need to redeem points for some presents this year, here are some of the best ways to accomplish that goal.

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Redeem points for gift cards

There are two primary ways you can utilize gift cards for holiday gifts.

One option is to redeem your points or miles for gift cards at places like Target or Best Buy and then use them to purchase gifts. This is what the reader who messaged Summer was hoping to do. But, of course, you can also give the gift card as the gift itself.

Before getting too excited about redeeming points or miles for gift cards, note that some programs will only mail physical gift cards to your home address. You’ll have to pass it on from there. And, some programs only offer electronic gift cards. And while this shouldn’t be what stops you, just keep in mind that some programs provide a better return for your points when redeeming for gift cards than others.

If you want to redeem your points or miles for gift cards, here are options to consider among the major credit card rewards programs, hotel loyalty programs and airline loyalty programs:

• Chase Ultimate Rewards: Redeem at a rate of 1 to 1.11 cents per point
• Citi ThankYou Rewards: Redeem at a rate of 1 cent per point usually, but some gift cards are on sale through Dec. 16, 2020 at a rate of 1.11 cents per point
• American Express Membership Rewards: Redeem at a rate of 0.7 to 1 cent per point for merchant-specific gift cards and 0.5 cents per point for American Express gift cards
• Delta SkyMiles: Redeem at a rate of 0.9 cents per mile for Delta gift cards
• Capital One Venture Rewards: Redeem at a rate of 0.8 to 1 cent per mile
• Southwest Rapid Rewards (only Rapid Rewards cardholders): Redeem at a rate of 0.33 to 0.67 cents per point
• Marriott Bonvoy: Redeem at a rate of 0.4 cents per point for Marriott gift cards and 0.2 to 0.33 cents per point for other gift cards
• Wyndham Rewards: Redeem at a rate of 0.36 to 1.14 cents per point
• United MileagePlus: Redeem at a rate of 0.3 cents per mile
• Choice Privileges: Redeem at a rate of 0.31 cents per point
• IHG Rewards Club: Redeem at a rate of 0.19 to 0.2 cents per point

Out of all of the options discussed above, only American Express Membership Rewards allows you to also redeem points for gift cards that aren’t merchant-specific.

The reader who wrote to Summer might be tempted to redeem Amex Membership Rewards points for Amex gift cards at a rate of 0.5 cents per point. However, as you’ll see in a subsequent section, redeeming for a statement credit at a rate of 0.6 cents per point would be a better option if that level of flexibility is required. Otherwise, you could get double that value at some retailer-specific gift cards.

Related: Ultimate guide to maximizing your holiday purchases

Shop with points and miles

Some programs also allow you to redeem points and miles for merchandise. Here are some options to shop for holiday gifts using points and miles from several popular programs:

• Chase Ultimate Rewards
  • Shop for Apple products through the Apple Ultimate Rewards Store at a rate of 1 cent per point
  • Shop with points at Amazon at a rate of 0.8 cents per point
• American Express Membership Rewards
  • Pay with points at checkout when shopping with Amazon, Best Buy, Boxed, Dell, GrubHub, Newegg, PayPal, Rite Aid, Saks Fifth Avenue, Staples and Walmart at a rate of 0.7 cents per point
  • Pay with points at checkout when shopping with Ticketmaster at a rate of 0.5 cents per point
  • Shop with Membership Rewards points at a rate of 0.5 cents per point
• Citi ThankYou Rewards
  • Use points for purchases at Amazon (0.8 cents per point) and PayPal
  • Use points for statement credits when you shop with Best Buy or the 1800Flowers family of brands
• Capital One Venture Rewards
  • Use miles for purchases at Amazon and PayPal at a rate of 0.8 cents per mile
• United MileagePlus
  • Shop for merchandise using your miles at United MileagePlus Awards
• Southwest Rapid Rewards (only Rapid Rewards cardholders)
  • Shop for merchandise using your points at Southwest Rapid Rewards More Rewards
• Marriott Bonvoy
  • Shop for merchandise using your points at Marriott Bonvoy Shop with Points
• IHG Rewards Club
  • Shop for merchandise using your points using the IHG Rewards Club catalog
  • Use points to buy select games, software, movies, eBooks, eMagazines and eNewspapers through IHG Rewards Club digital rewards
• Choice Privileges
  • Shop for golf merchandise using the Golf by Choice program
  • Use your points for select magazine subscriptions through MagsforPoints
• Wyndham Rewards
  • Shop for merchandise using your points in Wyndham Rewards’ online points catalog

Note that I didn’t list redemption rates for some of the options in this section. So, if you have points or miles in several programs, it may be worth shopping around.

Plus, check whether there will be shipping costs on your order as well as the shipping timeline. After all, you don’t want to use your points and miles and then still not get the gift in time.

Related: Why one TPG staffer isn’t going to ‘burn’ his miles for merchandise

Redeem for statement credits or cash-back rewards

Finally, you can also redeem points and miles in some programs for statement credits or cash-back rewards. Doing so usually provides a relatively low value per point. But, some programs now offer improved statement credit options for select purchase types.

Here’s what you need to know about redeeming for statement credits or cash-back rewards in the most popular programs:

• Chase Ultimate Rewards
  • 1.5 cents per point for Chase Sapphire Reserve cardholders and 1.25 cents per point for Chase Sapphire Preferred Card holders through Chase’s Pay Yourself Back feature for a statement credit to cover purchases at grocery stores, restaurants (including takeout & eligible delivery services), home improvement stores and select charitable organizations within the last 90 days through September 2021
  • 1 cent per point for cash-back rewards
• American Express Membership Rewards
  • 0.6 cents per point for statement credits
• Citi ThankYou Rewards
  • 0.8 cents per point for a statement credit to cover dining, grocery, gas, clothing and department stores, utility, entertainment and drugstore purchases
  • 0.5 cents per point for other statement credits or cash-back rewards
• Capital One Venture Rewards
  • 1 cent per mile for a statement credit to cover travel purchases in the last 90 days
  • Through the end of Sept. 30, 2021, 1 cent per mile for a statement credit to cover food delivery, streaming services (only personal cards) and phone services (only business cards)
  • 0.5 cents per mile for other statement credits or a check to your address

If you have the Chase Sapphire Reserve or Chase Sapphire Preferred, you will likely get the best value buying holiday gifts at grocery stores, restaurants or home improvement stores. Similarly, if you happen to have eligible grocery, restaurant or home improvement charges already on your card from the last 90 days, you could also reimburse yourself for those purchases and use the money to buy holiday gifts.

That’s essentially what TPG’s Richard Kerr did to cover the cost of an iPad. In the case below, using 7,555 points from the Sapphire Reserve to offset a grocery charge made back in September would trigger $113.33 statement credit to the card account at a rate of 1.5 cents per point. That could free up the cash to buy what you now want to give.

If you don’t have any eligible charges to reimburse at a higher rate, you may even find it useful to redeem Chase Ultimate Rewards points for cash-back rewards at a rate of 1 cent per point if you are sitting on points and money is really tight.

Related: Savvy rewards travelers focus on transferable points for the most flexibility

Bottom line

On paper, redeeming points or miles for holiday gifts will provide less value than redeeming for travel. But, if you don’t have extra cash this holiday season, cashing in your points or miles may be the best way for you to provide holiday gifts for your kids and more.

Sometimes, it’s best to ignore valuations and use your points and miles however it serves you best. And while it’s worth considering which of the above methods will provide the best value for the gifts you want to give. For example, as I mentioned above, the reader who wrote Summer might not want to redeem for an American Express gift card at a rate of 0.5 cents per point. Instead, he or she would be better off redeeming for a statement credit at a rate of 0.6 cents per point.

Featured image by goodpong/Getty Images.