Making the most of credit card rewards

March 30, 2021
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There’s nothing better than checking your credit card reward points balance and seeing you’ve amassed a healthy pile… until you start thinking about the best use for those points and inevitably get overwhelmed. The good news is there’s no right or wrong way to use your reward points. Just as you use your credit card in a way that optimizes your budget, lifestyle, and spending habits, there’s a savvy way to make the most of your points, too.

The general rule of thumb is to stick with redemption options where your points are worth at least 1 cent each, but your mileage may vary — after all, it’s not great economics if it’s not the right fit for your unique situation. So instead of a prescriptive list of dos and don’ts, we’ve outlined a number of different objectives you might have for redeeming your reward points, in hopes of helping you figure out the best scenario for you. Let’s dig in!

Make the most of your budget. There are many theories and calculations on this category, and particulars really depend on the card, but cash back rewards are a perfect opportunity to supplement your budget — regardless of whether you bank your points or spend as you go. Would you like to put more money in your emergency savings? If the answer is yes (and the answers to both “Are you using your card for essentials, like groceries?” and “Have you paid off your balance?” are also yes), then by george, you’ve found some extra savings! Cash back options also work well to offset expenses. Say, for example, your post-holiday bills are higher than usual. If you’ve not yet used your credit card rewards, this would be a practical use.

Make a dent in your payments. Did unexpected expenses have you reaching for your credit card more than usual last month? Then why not opt for a statement credit when redeeming your points? By applying your “free” money back to your card, you have that much less to work toward for the big payoff.

Make someone’s day. Whether you redeem your points monthly for birthday gifts or once a year for holiday shopping, this is an excellent use for them. Most credit cards offer tons of options for gift cards, for example, and who doesn’t appreciate receiving one of those? If your “gift” column in your monthly budget was empty or lacking, you just solved a budgeting problem. And if it wasn’t, you can reallocate the funds for investing or saving.

Make your own day. Chances are, a gift card or other reward has caught your eye when gift shopping for family or friends. A concert, pedicure, or the latest techie gadget is a great incentive for reaching a goal — financial or otherwise.

Make life easier, smarter, safer, or healthier. That cordless vacuum, smart thermostat, security camera, or fitness tracker you’ve been eyeing? Why not use your reward points for your (or your family’s) lifestyle enhancement? You might say that you could find that item on sale at a better deal, and you might be right. But, is it something you could afford to buy outright, right now? If yes, then consider purchasing it with your card, paying off the balance, and adding those points to your rewards bankroll. But if the answer is no, then this may be the perfect use for those rewards.

Make a quick escape. How about a family ski adventure, a romantic bed and breakfast sojourn, or a spa getaway with the girls? Reward points could easily cover airfare, lodging, and/or experiences. With some advance planning (you’ll want to check availability) and strategic spending, it’s in the bag — along with your clothes and toiletries.

Make your dreams come true. Is a Greek Isle cruise, whole-family Disney vacation, or culinary tour of the Amalfi coast on your bucket list? How about a private helicopter lesson, whitewater rafting, or a hot air balloon ride? Sounds like you’ve found your ideal points category. A bit of research, patience, and intentional spending will have you making that wish list a reality.

Make your points multiply. The only thing better than reward points is more reward points! Keep your eyes peeled for promotions from your credit card provider that may increase the number of points you earn for certain purchases. It’s a great way to boost your points-earning power now — so you have more points to use later. (We’d be remiss if we didn’t mention our current credit card promotion, where you can get 2,500 bonus points‡ — or $25 cash back! — after your first purchase, plus extra points‡ for your most common purchases for the first 90 days after you open a new credit card from UBT. Check it out.)

Here’s the bottom line: How — and when — you choose to use your credit card reward points depends on your finances, goals, and personal preference. The only definite “don’t” would be to leave your points unused. 

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‡ Offer subject to credit approval. Valid on Rewards and Signature credit cards. Receive 2,500 bonus points after your first purchase and earn additional bonus points on select purchases made within 90 days of card open date. Merchant Category Codes: Bonus points for reward categories (e.g., dining, groceries) are dependent upon the code assigned to the merchant that identifies the merchant’s primary area of business. We do not assign or have control over the codes assigned to a merchant. Similar codes are grouped into categories in order to offer bonus points to you. If you make a purchase at a merchant whose code matches a category that gives you bonus points, you will earn bonus points on the transaction. Promotion valid on approved applications received February 1, 2021, to June 30, 2021. Member FDIC.

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