How to Use Your Credit Card Rewards to Spend Less on Holiday Gifts
If you're feeling squeezed by the inflation-addled cost of holiday shopping this year, but still want to buy gifts for family and friends, your hard-earned credit card rewards can come in handy.
As The Points Guy and others point out, you almost always get the best value out of your rewards when you spend them on travel, such as airfare and hotel bookings, versus redeeming points and miles for cash back or non-travel purchases. However, if you're looking for ways to reduce the out-of-pocket cost of presents this holiday season (and don't have an imminent travel-related use for your rewards), consider strategically spending some of those points and miles on the people you care about.
Gift your points and miles
One way to get great value out of your credit card rewards is to gift them to someone else to use for travel. This will usually require you to transfer your points to a partner airline or hotel loyalty program before you can pass them on to someone else (an exception being Chase Ultimate Rewards members in the same household). Some airlines will charge a miles transfer fee, while most hotels allow points transfers to another member at no cost.
To get around fees and transfer limits, you could offer to book travel for the recipient using your rewards—just don't do so before confirming they're on board.
Redeem points for cash or statement credits
Some rewards programs allow you to pay yourself back with your points—either by redeeming them for a statement credit or cash rewards, such as a direct deposit or mailed check. This can help offset the cost of gifts you plan to or have already purchased. Your mileage may vary, however: Chase Ultimate Rewards typically offers the best per-point value through its Pay Yourself Back statement credit (1–1.5 cents per point redeemed), while American Express Membership Rewards allows just 0.6 cents per point spent on statement credit.
Shop with points at specific retailers
Another non-travel redemption option is spending credit card rewards on merchandise from retailers like Amazon, Apple, Walmart, and Best Buy as well as through PayPal. (Airline and hotel points can sometimes be used on merch as well as media subscriptions.) If you're shopping at these stores anyway, you can apply points to purchases at checkout rather than charging costs to your card.
Again, the value varies significantly across rewards programs and retailers. Chase Ultimate Rewards are worth 1 cent per point at Apple but 0.8 cents per point at Amazon; transactions made with Citi ThankYou Rewards may have exclusions and minimum purchase requirements.
Use points to purchase gift cards
Finally, most rewards programs have a selection of gift cards available for purchase with points. You can give gift cards as gifts or use them to buy presents at retailers that aren't eligible for shopping with points. Be sure to read the fine print, as the delivery options may range from a physical card sent to your address on file to an e-card.
And again, the value of your points will depend on the rewards program—it probably isn't a surprise at this point that Chase Ultimate Rewards redemption rates top the list with the biggest selection, while airline and hotel rewards get the lowest value when applied to gift cards. American Express Membership Rewards allows you to buy Amex gift cards (not merchant-specific), though at a rate of only 0.5 cents per point.