Example: 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 3 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.
* This is a fictional, but realistic, example.