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Is it worth using rewards points to pay off credit card debt?

Pay down your credit card debt by redeeming your rewards points for statement credit.

If you’ve been steadily racking up credit card debt and have vowed to get back on track, you can likely redeem your rewards points for statement credit and pay down some – or all – of your card balance. Credit card rewards, which includes cash back, points and miles, can often be turned into statement credit which you can use to start hacking away at your debt.

How can I use reward points to pay off credit card debt?

Most rewards card providers allow you to redeem points for statement credit to your account. How this is done depends on your card, but generally involves the following steps:

  1. Log on to your credit card account, or your rewards account if they’re separate.
  2. Search for pay back with points or check points activity.
  3. Select the amount of points that you’d like to redeem for statement credit.
  4. Follow the prompts to complete your redemption.

Once your redemption is processed, allow several business days for the credit to be added to your card account. Your credit card balance should then be lower by the cash amount that you’ve redeemed for.

How much statement credit will I get for my reward points?

The amount of points required for a statement credit reward varies by rewards program. Below, we’ve outlined what’s required to redeem $100 worth of statement credit with the major credit card providers in Canada.

Rewards programPoints for $100 cash backRedemption requirements
American Express16,700
  • Minimum cash back redemption starts at 1,000 points
  • Credits usually appear 2-3 business days later or on the first billing statement following redemption
BMO30,000
  • Minimum cash back redemption starts at 15,000 points (redeem in $50 increments)
  • Credits usually appear 3-5 business days later or on the first billing statement following redemption
CIBC16,000
  • Minimum cash back redemption starts at 4,000 points (redeem in $25 increments)
  • Credits usually appear 2-5 business days later or on the first billing statement following redemption
RBC17,200
  • Minimum cash back redemption starts at 2,500 points (redeem in $25 increments)
  • Credits usually appear 2-3 business days later or on the first billing statement following redemption
ScotiabankApprox. 13,600
  • Minimum cash back redemption starts at approximately 3,400 points (redeem in $25 increments)
  • Credits usually appear 2-3 business days later or on the first billing statement following redemption
TD40,000
  • Minimum cash back redemption starts at 10,000 points (redeem in $25 increments)
  • Credits usually appear 2-3 business days later or on the first billing statement following redemption

Table information is valid as of 15 July 2019 based on provider websites.

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What other factors should I consider?

Before using rewards points to pay off your credit card balance, make sure you consider the following details:

  • Point value. Depending on your rewards program, redeeming for statement credit may not give you the best value for your points. Compare the value of statement credit against other rewards options and find out which type of redemption gives you the best value.
  • Other cash redemption options. Compare the value of statement credit redemption with other options like gift cards. In some cases, you could get a $100 gift card for fewer points than a $100 statement credit would cost you.
  • Miles credit cards. If you have a credit card that earns miles, you may not be able to redeem them directly for statement credit.
  • Minimum payments. Credit statement is usually applied to your minimum monthly payment. This means you’ll still need to pay at least the minimum amount listed on your statement to avoid penalties.
  • Reward processing. Allow anywhere from two to 30 days for your rewards or statement credit to show up in your account. Continue making payments to avoid interest and potential late penalties.
  • Consider your long-term expenses. Use your points for travel if you have an upcoming trip to save money on your airfare.

Should Milla redeem her reward points for statement credit or gift cards?

At the beginning of December, Milla was approved for a new American Express credit card that offered 1x point per $1 spent and 20,000 bonus points if she spent $2,000 in the first three months she had the card.

Milla ended up spending $4,000 in December and started the new year with 24,000 points and $4,000 in credit card debt.

While Milla wants to pay off her credit card, she also wants to get good value out of her rewards. So she considers her options:

  • Statement credit: If Milla used these points for statement credit, she could get $144.
  • Gift cards: Milla could use her points to get $240 worth of gift cards.

Based on this comparison, Milla decides to redeem her points for a $240 gift card. She uses this gift card to pay for dining and groceries and puts the money she’d normally spend on these categories towards paying off her credit card balance.

Compare rewards credit cards

Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
OFFER
HSBC +Rewards™ Mastercard®
30,000 Points
2x points per $1 spent
11.9%
$0 annual fee for the first year ($25 thereafter)
Min. recommended credit score: 630
Get 30,000 Points (up to $150 in value) when you spend $2,000 in the first 6 months. Plus, get the 1st year annual fee waived for the primary cardholder ($25 value). Apply by January 31, 2022.
American Express Cobalt Card
50,000 points
Up to 5x points per $1 spent
20.99%
$155.88
Min. recommended credit score: 700
Earn up to 50,000 Membership Rewards points in your first year. Earn 2,500 Membership Rewards points for each monthly billing period in which you spend $500 in net purchases on your card (up to 30,000 points). Plus, earn a Welcome Bonus of 20,000 Membership Rewards points when you spend a total of $3,000 in purchases on your Card in your first 3 months of Cardmembership.
BMO World Elite Mastercard
30,000 points
Up to 3 points per $1 spent
20.99%
$0 annual fee for the first year ($150 thereafter)
Min. recommended credit score: 760
Get up to 30,000 points and the $150 annual fee waived in the first year.
American Express Aeroplan Card
40,000 points
Up to 2x points
30% annual interest rate applies to balances not paid in full each month
$120
Min. recommended credit score: 700
Earn up to a total of 40,000 welcome bonus Aeroplan points and a bonus Buddy Pass. New Cardmembers can earn up to $1,200 in value within the first year.
American Express Business Edge Card
57,000 points
Up to 3 points per $1 spent
19.99%
$99
Min. recommended credit score: 700
Earn up to 57,000 Membership Rewards points in your first year.
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Bottom line

Redeeming your rewards points for statement credit to repay your credit card balance isn’t always the most valuable way to use your points. However, it could help make a dent in paying down your balance.

If you want to clear your debt without accruing more interest and want to save your points for a different type of reward, a 0% or low APR balance transfer credit card could be a good idea. This way, your debt will only accrue a little – if any – interest, while you can cash in your rewards points for a reward of value.

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