Best Ways to Use Credit Card Points

With the holiday season coming up, this may be the time to learn the best ways to use your credit card points for saving money and stretching your points for maximum value. The key factor in determining how much value you can get from your points is the points-to-cash conversion formula. With most rewards points programs, points can be used to convert to cash, purchase gift cards or merchandise, or buy airline tickets. When determining the value of your points a simple formula should be applied:

Dollar Value of the Reward / Number of Points required to redeem it


$25 gift card / 2,500 points = $0.01 per point

Generally, you should use $0.01 per point as your baseline to compare value when redeeming points for different things. So, which types of rewards provide the best value? That’s not a simple question to answer considering each rewards program offers a wide variety of options and redemption opportunities. But, there are some general rules-of-thumb you can follow for the sake of comparison.

Gift Cards

Across the entire spectrum of rewards programs, the one reward that tends to provide the best value is gift cards. In most cases, gift cards can be redeemed at $0.01 per point, as in the example above. When you shop on the rewards program’s online shopping mall, you are likely to find discounted gift cards with some going as much as $0.02 per point. That’s like a 50% discount. The only drawback is the limited variety of gift cards from which to choose. If you have a family of boys to shop for and your rewards program offers Bed, Bath and Beyond gift cards, you might not have some happy campers. Many rewards programs offer gift cards for stores like Target, ToyRUS, Banana Republic and other popular retailers.

Shop at the Online Shopping Mall

With most of the better rewards programs, you will have access to their online shopping malls where you will find dozens if not hundreds of merchants and retailers. And, most of the time, especially during the holiday shopping season, the rewards program will boost your point purchasing power when you buy something through its online shopping mall. It’s pretty much the same as buying merchandise at a discount, but sometimes the discounts can be significant. When making out your holiday shopping list, it would be worthwhile to roam through the online shopping mall first.

Fly Somewhere

If you use an airline travel rewards credit card, there probably is no better value for your points than buying an airline ticket. But if you have a regular rewards credit card in which you points are redeemable for air travel, you may need to do some comparison to determine how far your points can take you. Again, you’re looking for the highest point conversion value somewhere in the $0.01 per point range. If you can book a domestic flight that costs around $400 for 40,000 points, that might be a pretty good deal. Often times your rewards program might offer a special deal on airline redemptions so it’s worthwhile keeping your eye out.

Donate to Charity

If you are charitably inclined, but your budget is tight, you can always donate your points to your favorite charity, and just so you know, charitable organizations love to receive rewards points.