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Credit Cards

6 times you should redeem points and miles rather than pay cash

When airfare is cheap, it might make more sense to pay with cash and save your points.

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Jun Xu | Moment | Getty Images

Points and miles are terrific tools that can open up incredible travel opportunities. Social media is awash with content by the Average Joe who managed to take extravagant vacations with just a few credit card sign-up bonuses, along with budget travelers stretching their rewards to the max.

If you're new to points and miles, you may be struggling to determine when using points or miles versus paying cash makes the most sense. The answer depends on a few different factors and varies for each traveler. But here are six times when you should redeem points rather than pay cash.

Best cards for earning points and miles

The most valuable type of points you can earn is those that can be transferred to airline and hotel partners, such as American Express Membership Rewards® points, Chase Ultimate Rewards® points, Citi ThankYou® Points and Capital One miles. Before diving in, here's a look at some of CNBC Select's best rewards credit cards for earning transferrable points and miles:

Chase Sapphire Preferred® Card

On Chase's secure site
  • Rewards

    Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.

  • Welcome bonus

    Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.

  • Annual fee

    $95

  • Intro APR

    None

  • Regular APR

    21.49% - 28.49% variable on purchases and balance transfers

  • Balance transfer fee

    Either $5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

  • Terms apply.

 

American Express® Gold Card

On the American Express secure site
  • Rewards

    4X Membership Rewards® points at Restaurants (plus takeout and delivery in the U.S.) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases

  • Welcome bonus

    Earn 60,000 Membership Rewards® points after you spend $6,000 on eligible purchases with your new Card within the first 6 months of Card Membership.

  • Annual fee

    $250

  • Intro APR

    Not applicable

  • Regular APR

    See Pay Over Time APR

  • Balance transfer fee

    N/A

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

  • See rates and fees, terms apply.

 

Capital One Venture Rewards Credit Card

  • Rewards

    5 Miles per dollar on hotel and rental cars booked through Capital One Travel, 2X miles per dollar on every other purchase

  • Welcome bonus

    Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening

  • Annual fee

    $95

  • Intro APR

    N/A for purchases and balance transfers

  • Regular APR

    19.99% - 29.99% variable

  • Balance transfer fee

    $0 at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

See rates and fees, terms apply.

 

Citi Premier® Card

On Citi's secure site
  • Rewards

    3X points per $1 spent at restaurants, supermarkets, gas stations, and on hotels and air travel, 1X points on all other purchases

  • Welcome bonus

    Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening. Plus, for a limited time, earn a total of 10 ThankYou® Points per $1 spent on hotel, car rentals, and attractions (excluding air travel) booked on the Citi Travel℠ portal through June 30, 2024.

  • Annual fee

    $95

  • Intro APR

    None

  • Regular APR

    21.24% - 29.24% variable

  • Balance transfer fee

    5% of each balance transfer, $5 minimum

  • Foreign transaction fee

    None

  • Credit needed

    Good/Excellent

  • See rates and fees. Terms apply.

 

1. When you're booking luxury travel

Using points for luxury travel can be a great way to save money and access amazing travel experiences. With the right loyalty program, you can save on airfare, hotels, car rentals, cruises, and more. One of the best uses of points is for first-class flights and luxury resorts. An international first-class ticket can easily cost over $10,000 round-trip, while a top-tier hotel costs over $1,000 per night. Most people can't afford these experiences, but points can make them more attainable.

Points can make expensive hotels more affordable since they can often be redeemed for free nights at high-end properties that would otherwise cost thousands of dollars per night in cash. 

The Maldives is a popular (and pricey) destination where your points can go a long way. A night in a beach villa with a private pool at the Alila Kothaifaru Maldives can easily go for $1,000 or higher. Meanwhile, you can book the same room for just 30,000 Hyatt points. At 3.3 cents each, you're getting exceptional value for your points, making this a great redemption.

Even if you can afford luxury travel, points can save you thousands of dollars that you can put toward other vacation expenses. The Maldives is notoriously expensive, with round-trip transportation between the airport and hotel often costing over $500 per person. Everything from meals to activities and spa treatments will command a premium, so using points to save on hotel and airfare can free up your budget for other experiences.

2. During peak and off-peak travel season

During peak travel seasons, such as summer and holidays, points can save you money when cash fares are sky-high. It's important to note that many airlines now impose dynamic pricing, meaning the cash price determines the mileage fare. However, plenty of programs still publish an award chart with set pricing so you can get value out of your miles. For example, summer fares between the West Coast and Paris can go as high as $1,300. Meanwhile, Avianca Lifemiles charges just 60,000 miles round-trip for an economy-class ticket.

Off-peak travel can also be an exceptional use of miles. For example, programs like British Airways Executive Club, Iberia Plus and Virgin Atlantic Flying Club still follow award charts, with lower prices to specific regions on off-peak dates. This is a great way to stretch your miles further while saving money.

The same goes for hotel loyalty programs, which adjust pricing based on demand. World of Hyatt even publishes an award chart specifying peak and off-peak pricing, which starts at just 3,500 points per night. Despite off-peak hotel prices being lower, you can still save money by using points. For example, the Alila Manggis resort in Bali has off-peak rates in October, starting at around $150 per night (including taxes). The same room requires just 3,500 Hyatt points, getting you 4.3 cents in value per point. That's higher than the 3.3 cents-per-point you can get in the earlier example in the Maldives.

3. When award tickets go on sale

Some loyalty programs offer the occasional sales, deeply discounting the miles needed for an award. For example, the Flying Blue program often runs Promo Rewards discounting award tickets by as much as 50%. When award tickets are this cheap, you are usually better off redeeming points than paying cash.

4. When you're booking flights last minute 

Contrary to popular belief, there are hardly ever "last minute deals" on airfare – you need to book in advance to get a good deal. Last-minute flights can be expensive, which is where points come in. Many airlines release saver-level award space (especially in premium cabins) closer to departure. So if you book a last-minute trip, you can often find good award availability and save money on expensive fares. It's a win-win.

5. When your points are about to expire

Letting your points expire is one of the worst mistakes you can make with your rewards. Most airline miles and hotel points have expiration dates and the best way to track them is through an app like AwardWallet or MaxRewards. You'll get notified if your points are about to expire so you can redeem them ahead of time. While not all loyalty programs are included, most are and the program is free to use. 

Using points before they expire is important because it allows you to get the most value out of them. So if you know an expiration date is nearing and you have no other way to keep them active, use your points for travel so they don't go to waste. 

6. When you're not close to meeting your status goals

When deciding between using points vs. cash, it's important to also consider your elite status goals. Airlines don't count award bookings towards elite status qualification. So if you're close to reaching your goal, you might want to consider booking a cash fare instead of using miles. You can also double-dip by redeeming a flexible currency like Capital One Venture Miles. Capital One lets you book flights with your credit card, then redeem them at one cent per mile towards travel expenses. You can earn miles and elite status qualification through your chosen frequent flyer program while covering the cost of your ticket with Capital One miles. 

Hotels are more flexible on this front. Choice Privileges, Hilton Honors, IHG One, Marriott Bonvoy and World of Hyatt all count award stays towards elite status. Knowing your loyalty program's policy can help you decide whether it makes more sense to redeem points vs. cash.

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What's the best use of points?

You'll generally get the most value by redeeming them for premium travel: international business class, first-class flights and luxury hotels. These high-priced experiences give you the highest return on your points, especially if you're booking with a loyalty program that publishes a set award chart. Even programs that utilize dynamic pricing can offer you tremendous value for your points when redeemed for premium travel. 

That being said, the best use of points comes down to your travel needs. If you just want to save money, use your points. Don't obsess over the cent-per-point value you're getting or traveling to far-off destinations to keep up with the travel influencers. Redeem your points whenever it saves you money and keeps your budget on track. Points can devalue at any moment and using rather than saving them indefinitely is always the best way to go.

What's the worst use of points?

The worst use of points is generally for non-travel purchases. Gift cards, cash back and merchandise may seem like sensible redemptions, but they'll often get you less than half the value of your points. Points are meant to help you save on travel purchases, so using them for anything else is generally a  losing proposition. 

If you want to redeem your rewards for non-travel purchases, you might be better off with a cash-back card like the Chase Freedom Unlimited® or Citi Double Cash® Card. You'll pay no annual fee and earn generous cash-back rewards in popular spending categories. You can even convert your cash-back rewards to points. Citi Double Cash Card rewards can be converted to Citi ThankYou® Points if you have a card like the Citi Premier® Card. Meanwhile, you can convert your Chase Freedom Unlimited cash to Ultimate Rewards points if you have another card that earns those points (i.e., Chase Sapphire Preferred® Card, Chase Sapphire Reserve® or the Chase Ink Business Preferred® Credit Card).

Chase Freedom Unlimited®

On Chase's secure site
  • Rewards

    Enjoy 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery services, 6.5% cash back on travel purchased through Chase Travel, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; and 3% cash back on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

  • Welcome bonus

    INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back!

  • Annual fee

    $0

  • Intro APR

    0% for the first 15 months from account opening on purchases and balance transfers

  • Regular APR

    20.49% - 29.24% variable

  • Balance transfer fee

    Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

  • Member FDIC. Terms apply.

Citi Double Cash® Card

  • Rewards

    Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24

  • Welcome bonus

    Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.

  • Annual fee

    $0

  • Intro APR

    0% for the first 18 months on balance transfers; N/A for purchases

  • Regular APR

    19.24% - 29.24% variable

  • Balance transfer fee

    For balance transfers completed within 4 months of account opening, an intro balance transfer fee of 3% of each transfer ($5 minimum) applies; after that, a balance transfer fee of 5% of each transfer ($5 minimum) applies

  • Foreign transaction fee

    3%

  • Credit needed

    Fair/Good/Excellent

  • See rates and fees. Terms apply.

How to calculate the value of your rewards

Calculating how much value you would potentially get from your points and miles is easy. Simply take the cash cost of the redemption (such as a flight or hotel stay) and divide it by how many points/miles are needed.

For example, if a flight were to cost $500 or 25,000 points, you would get two cents in value per point. The calculation is: $500 / 25,000 points = $0.02 per point.

Find the best credit card for you by reviewing offers in our credit card marketplace or get personalized offers via CardMatch™.

Bottom line

Ultimately, deciding whether to redeem points rather than pay cash for travel is a personal choice. You'll get more value by using them for high-priced travel experiences. But if you're a budget traveler who just wants to save a few bucks, use your points for that economy flight or low-category hotel redemption. The key is to have a use in mind before you start earning points. That way, you're less likely to hoard points and get caught in a program devaluation. "Earn and burn" should be your mantra and by planning ahead, you can do this while still getting value from your points.

Catch up on CNBC Select's in-depth coverage of credit cardsbanking and money, and follow us on TikTokFacebookInstagram and Twitter to stay up to date.

For rates and fees of the American Express® Gold Card, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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