Best Way to Use Credit Card Points

Credit card reward programs can get pretty complicated.

It’s easy to under how you earn the points, but how do you spend them?

You don’t want to spend them the wrong way and leave money on the table.

When we got the credit card, I was happy to earn 5% on my purchases at Amazon but I wasn’t entirely sure how to spend the points. What was the best way?

Fortunately, Amazon and Chase have made it very simple once you understand the program.

So, what is the best way to use these Amazon credit card points?

Table of Contents
  1. Ways to Use Credit Card Points
  2. 💸 Cash Back is the Best Way
  3. Not All Rewards Are Like This

Ways to Use Credit Card Points

The credit card has a few options but they’re all valued at 1 penny per point.

You can use them:

  • for purchases at – 1 penny per point
  • for Travel – 1 penny per point
  • for Cash Back – 1 penny per point
  • for Gift Cards – 1 penny per point

Unfortunately for your rewards (but fortunately for your sanity and memory), everything is 1 cent per point.

💸 Cash Back is the Best Way

Right now, given how all the redemption methods value the points at 1 penny per point, cash back is the best option.

Shopping on with your points may sound great but when you pay with points, you aren’t earning 5% point on those purchases.

If you are carrying a balance on your card, you may be tempted to use the points on purchases to keep your balance low… but you are still better off getting the cash, paying down your balance, and then making those purchases with your card because you’re earning 5%.

Gift cards and other redemption methods will also be sub-optimal because you can always make those purchases on the card and be earning points in the process.

Getting cash back is super simple… just log into your account, click on the “Earn/Use” drop down at the top (where it shows your point total), and select Cash Back at the top:

Then you can transfer the points into cash directly into your linked account. You can redeem for a statement credit too if you want to skip a step, it won’t affect your rewards benefit but it also will not count towards your minimum payment that month.

Until Chase and Amazon change the redemption values, or add transfer partners that make it a better deal, cash back is king with the card.

Not All Rewards Are Like This

You might think that cash back is the best for all credit cards but that isn’t the case.

There are many programs that offer a higher valuation on a point when you spend it on other things. For example, there are programs where you can get a higher value per point when you use those points on the card’s travel portal – Chase Ultimate Rewards is a good example of this.

Sometimes you can get better value if you transfer the points to a transfer partner, as is the case with some airlines. You have to know the airlines involved and have a use for the points, which will affect the value of those points to you personally, but it offers a potential for higher values.

But for the Amazon card, until something changes, cash back is king.

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About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools, everything I use) is Empower Personal Dashboard, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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