Depending on the type of rewards credit card you sign up for, you can earn all kinds of free stuff just for being a cardholder.
If you get one of the best travel credit cards, for example, you can count on earning free hotel stays, almost-free airfare, and various other travel goodies and upgrades. Some cards offer additional, lesser-known perks such as primary auto rental coverage, extended warranties, and zero liability for fraud to sweeten the deal.
At the end of the day, a good rewards credit card can be worth its weight in gold. But despite evidence to the contrary, many people assume they can’t benefit from one.
When it comes to travel credit cards, for example, I often hear people say they don’t travel, so they don’t have the need. And when it comes to your standard cash-back cards, many people feel they don’t spend enough to justify having one.
The thing is, most of the top rewards cards offer some flexibility in how you redeem your rewards. And if you’re willing to think outside the box, you can easily find at least one way to redeem them that makes sense with your budget and your spending habits.
Other Ways to Redeem Those Airline Miles
From cash-back cards to airline credit cards, the options for redeeming your points are endless. Here are eight outside-the-box redemption possibilities you might not have considered:
No. 1: Turn Airline Miles into Lowe’s Gift Cards
A few years ago, my sister and her husband both signed up for the Southwest Airlines Rapid Rewards Premier Card in order to earn the sign-up bonus — but not for the reason you think. Even though this card helps you earn Southwest Rapid Rewards airline miles, the points are also good for an array of lucrative gift card options — and my sister’s family needed a new screen door!
After they each earned their respective sign-up bonus, they redeemed their miles for Lowe’s gift cards in 5,000-point increments for $50 each. Shortly after, they went to Lowe’s and ordered a new screen door.
While this isn’t the most lucrative way to redeem your airline miles, it’s a decent option to consider if you want to earn gift cards toward something you need anyway at a rate of one cent per mile. It’s just another example of how airline miles can be good for something other than plane tickets and seat upgrades. Who knew?
Meanwhile, the Discover It card allows cardmembers to get their cash-back bonus in the form of dozens of gift cards if they wish — most of them at a discount. For example, you could redeem $45 in cash back credit for a $50 Lowe’s gift card at the time of this writing.
Need a new screen door or appliance more than a trip to Florida? Cash in your miles for gift cards at a home improvement store such as Lowe’s. Photo: Lowe’s
No. 2: Pay Down Those Student Loans
A friend of mine recently cashed in a bunch of reward points for cash to pay down his student loans. To accomplish this goal, he and his wife both got a Citi Premier card and earned the sign-up bonus, then redeemed their points for checks to send to his student loan company. With this small move, they paid down $1,100 in student loans — and all with little effort and without taking on a part-time job.
This strategy worked so well because the Citi Thank You program has a “student loan option” that allows you to redeem points for a penny apiece. However, my friend had to check with his student loan company to make sure they would take a check from a third-party bank before pulling the trigger.
If you want to do the same without jumping through those hoops, you could always get a sturdy cash-back card and redeem your points for cash. After that, just send the money to your student loan company yourself.
No. 3: Use Miles to Book a Cruise
Do you prefer a sea-based vacation? If so, you can easily pay for your cruise with rewards from a variety of rewards credit cards. With points from the Chase Sapphire Preferred Card, for example, you can turn in your points for cruise-line gift cards for a penny each (e.g., 40,000 points = $400 in gift cards). Further, you can book nearly any cruise through the Chase Ultimate Rewards travel portal and score a 20% discount if you’re using points.
The Barclaycard Arrival Plus World Elite MasterCard is another good one when it comes to using rewards to pay cruise fare. With this card, you earn “miles” you can redeem for travel for one cent apiece.
In other words, 40,000 miles is worth $400 in travel with this card, and you can redeem your points for a cruise with any cruise line with no blackout dates or exclusions. Once you book any cruise of your choosing, you simply redeem your “miles” and erase all or part of the purchase from your account.
No. 4: Redeem for Small Increments of Cash Back
A lot of people feel they don’t spend enough to bother with credit card rewards, and that’s totally understandable. The thing is, almost anyone can earn a little bit of cash back they can use for fun money — and with little effort.
With either the Chase Freedom or the Discover It card, for example, you earn 1% cash back on all purchases no matter how little you spend, and earn up to 5% cash back in bonus categories that rotate each quarter. You can cash in at increments as low as $20 or redeem your points for gift cards or other options.
And since neither card charges an annual fee, you’ll never have to worry about canceling it, even if you barely use it. Even if you don’t spend a lot, it’s still hard to argue with free.
No. 5: Book an Airbnb or Vacation Rental
With so many big hotel chains offering rewards cards these days, it’s easy to assume that’s the only option lodging-wise. However, that couldn’t be further from the truth. Again, a handy fixed-value travel card opens the door to an array of travel possibilities — and even the ability to rent cheap vacation condos.
The Barclaycard Arrival Plus World Elite MasterCard is especially good for this. If you’ll remember, the miles you earn are redeemable for any type of travel at a rate of one cent apiece. If you despise the sterility of chain hotels, you can use the miles you earn to book spacious and homey vacation rental condos or Airbnb-type rentals instead.
- Related: Renting a House as a Vacation Option
No. 6: Use Your Points to Pay Down Your Mortgage
Not only does the Citi Thank You program let you use points to pay down student loans, but it offers the same option for mortgage prepayment as well. At the rate of one cent per point, you can redeem rewards for a check to your mortgage loan company, thus reducing the principal of your loan while also saving money on interest.
If you don’t want cash back and have no desire to travel, this is an especially good way to redeem your points and miles. After all, what do you have to lose — besides mortgage debt?
No. 7: Gift Your Points to Charity
Due to consumer demand, a lot of credit card companies make it easy for their customers to donate unused or unwanted points to a charity of their choice. That list includes the Discover It card, for example, which allows customers to donate through its Discover Giving initiative, or in the form of their Cashback bonus funds.
If you’ve struggled to give enough in the past, getting a card that offers this option is a great way to give back without taking from your bottom line. And having the ability to choose a charity that matches your values is a huge boon, too. With the Discover Giving program, for example, consumers can choose from over 1.5 million participating charities that help bridge the gap when it comes to poverty, hunger, research, and more.
No. 8: Trade Points for Stuff
If you don’t like the idea of free travel or cash back, another option is using your points for free stuff. No matter what type of rewards card you have, chances are good you can redeem your points and miles for various merchandise offered through their corresponding online shopping portal.
As mentioned, the Discover It card offers gift cards from dozens of different retailers, from Lowe’s to L.L. Bean, most at a 5%-10% discount off the face value of the card — meaning you’re getting more than a penny per point on your rewards.
The Chase Ultimate Rewards program also makes this option particularly easy. Using points, you can shop for anything from housewares to designer purses, update your wardrobe, or simply get some of your holiday shopping out of the way — and for free. Using your points this way isn’t always the best value (you’ll normally get around a half-cent per point), but it’s a good option for anyone who wants to shop with their points — either for themselves or for others.
Final Thoughts
When it comes to credit card rewards, airline miles and hotel points get all the glory. But that doesn’t mean those are the only (or best) redemption options out there. With a little bit of research and an open mind, you can use your points to get anything from a new screen door to a KitchenAid mixer. Heck, you can even pay down your mortgage or take a stab at those student loans!
So don’t forget to think outside the box when it comes to rewards. No matter who you are and how much you spend, there is at least one redemption option created just for you.
What is your favorite way to redeem credit card rewards? What is the best redemption you have ever made?
The post Eight Alternative Ways to Redeem Credit Card Rewards appeared first on The Simple Dollar.
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