The 7 Biggest Mistakes You Can Make When Redeeming Credit Card Rewards

Many of the credit card offers that appear on the website are from credit card companies from which Wise Bread receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This site does not include all credit card companies or all available credit card offers. Any opinions expressed are those of the author's alone, and have not been reviewed, approved, endorsed, or provided by the issuer.

Advertiser Disclosure ▾

This page contains affiliate links from which we receive a compensation. Like many publications Wise Bread is supported by affiliate commission from partner companies whose products appear on our site. This may influence which products we write about and the location and order in which products appear. We aren't able to cover every product in the marketplace.

Wise Bread Picks

• Travel Rewards Credit Cards
• Cash Back Credit Cards
• 0% Balance Transfer Credit Cards

It's easy to make a mistake when you are cooking something you've never made before, or trying to repair a complicated device. But what about redeeming your credit card rewards, how hard can that be?

It turns out that receiving the most value from your award points and miles can be more difficult than you think, and it's too easy to make costly mistakes. Here are seven of the top mistakes people make when redeeming their rewards.

Redeeming for Merchandise

It's fun to receive the latest gadget as a reward, but redeeming your points for merchandise is almost always a bad idea, for several reasons. First, these awards generally offer the least value per point or mile redeemed -- at best just one cent each. And even then, this calculation is made based on the full retail price of the item, which may be offered for a substantial discount elsewhere. In addition, those who pay for goods with their points will give up the chance to earn rewards from their purchase. Finally, a reward is not eligible for your credit card's purchase protection policies the same way that a purchase is.

Redeeming for Gift Cards

Getting a gift card might seem the equivalent of exchanging points for cash, but many credit card reward programs offer a poor rate of return when used for generic gift cards. The baseline value you should be getting in terms of “cash,” whether that be gift card or statement credit, is 1 cent per point or mile. The goal, of course, is to get more than that. All cash back cards offer 1 cent per point back. But you’re going to get the most value out of travel redemptions directly through the loyalty programs for award flights and stays.

Not Looking at Value

When you redeem rewards, you want to look at how much of your actual money you are saving, and choose the option that offers the best return. Once your miles reach a point where you can use them, you might get too eager to grab the first award flight available. First, think about what you would have paid for -- would you normally wait until there’s a sale or fly on less busy days to save money? If yes, then getting an award for a seat that is full price and during peak times did not really save you as much as it cost. Also, international flights and business/first class tickets will almost always give you more value per point than a domestic economy ticket. You’ve earned those rewards -- feel free to let yourself fly more comfortably.

Neglecting Point Transfer Options

There are now several different credit card reward programs that let you transfer your rewards to frequent flyer miles with the airlines or hotel points. The American Express Membership Rewards program features 16 different airline transfer options and three hotel options, while the Citi ThankYou Points program has 11 different carriers plus Hilton HHonors. The Chase Ultimate Rewards program has six airline and four hotel partners, plus Amtrak Guest Rewards. Finally, the Starwood Preferred Guest program features a whopping 29 different airline transfer partners. So it's up to you to find the airline program that what will offer the most value for your miles before transferring your points. (See also: Which Credit Cards Have the Best Travel Redemption Value?)

Paying for Double-Mileage Awards

A few years ago, the airline industry tried to pull a fast one on their frequent flyers, by doubling the price of most award seats, and labeling the old prices as "saver" awards. But it didn't take long for travelers to realize that the so-called "standard" awards weren't of much value. In order to get the most value from your miles, you need to do everything possible to find these rare saver awards, and consider saving your miles if only the so-called standard awards are available.

Not Considering Partners

One of the biggest mistakes you can make when redeeming your miles is not thinking about all the partners that might be available. This is easy to do as many airlines will not even show partner award seats on their website, making you call to find and book these seats. Thankfully, there are available resources such as ExpertFlyer that you can use to search award inventory and find what you need. In addition, there are also several award booking services offered, for a fee, that can find the most creative uses for your miles. (See also: The Secret to Redeeming Travel Rewards with Airline Partners)