What should I do with my credit card rewards during coronavirus?

Coronavirus is directly affecting us all. And among many other factors, you’re likely contemplating its effects on your finances — specifically your credit card rewards. There are different considerations for what you should do with them depending on your situation and the type of rewards you have.

What should I do with my rewards now that I’m not traveling?

There’s no cut-and-dry answer to this, as it depends on a variety of factors. However, here are a few common scenarios that might apply to you, as well as our recommendations.

• If you’re carrying a balance on your credit card and accruing interest… Use your rewards to pay down your balance, as the interest you accumulate is effectively eating into your rewards.
• If you have rewards in a frequent-flyer program or hotel loyalty program… Keep your rewards. In a frequent-flyer program, flights offer the best value. Similarly, hotel stays offer the best value in a hotel program. Redeeming your rewards for other options will likely give you such a poor value that you’re better off sitting tight, even if it means your points or miles could be worth slightly less later on.
• If your credit card provider lets you redeem rewards only for cash back or statement credit… Redeem your rewards. There’s little use hoarding cash back, as it’s not designed to give you higher value through travel redemptions or rewards transfers.

What if I have points or miles in a credit card rewards program with multiple redemption options?

If you can get a good redemption rate now and you don’t see a big upside to using your rewards later, consider redeeming now. A 1-cent-per-point-or-mile redemption rate is the industry standard. However, you’re likely better off keeping your points or miles as long as you see the possibility of traveling within the next year.

This is because travel typically offers far and away the best value for your rewards. With some programs, such as Chase Ultimate Rewards and Membership Rewards, you can find upwards of 2 cents per point with transfers to select travel partners.

Can rewards change in value or expire?

Another question on your mind might be how the value of your rewards will fluctuate — or, worse, whether they can disappear from your account entirely. Here’s the scoop on these understandable concerns.

Will the value of my rewards change?

The value of your rewards can change depending on how your card issuer or loyalty program tinkers with redemption options. Airlines, for example, are notorious for devaluing their miles by changing the prices of award flights. Hotel chains, similarly, shift award prices regularly.

Unfortunately, knowing that might not matter much. Non-flight and non-hotel redemptions in frequent-flyer and hotel programs, respectively, typically give you mediocre value.

Here’s the implication: If you have miles or points in an airline or hotel program, it’s probably best to hold on to your rewards.

If you have rewards in a program run by a credit card issuer, you might have a better reason to keep your points. That’s because you can often find other good uses for your rewards if certain redemptions get devalued. And if your issuer allows point transfers, it could be worth retaining the flexibility to move points to airlines and hotel chains when you’re ready to travel again.

Will my rewards expire?

Typically, your points or miles won’t expire inside a credit card rewards program as long as you keep your account in good standing.

This is the case with many issuers, including:

Keep in mind that certain cards might have different policies. For example, points from the Wells Fargo Propel American Express® Card don’t expire as long as your account is open. But points from the Wells Fargo Rewards® Card expire after 60 months.

Be vigilant with your rewards if you have a cobranded card, such as a hotel or airline credit card. Loyalty programs have their own rules on when rewards expire, and your credit card issuer can’t control that. On the bright side, there are usually a few ways to keep your rewards active if you don’t want to spend them right away.

Will I still have my frequent-flyer miles after an airline bankruptcy?

This depends on whether the airline continues operating after bankruptcy. If it does, you’ll still have your miles and probably keep any status you’ve earned. But if the airline ceases operations — for example, it doesn’t merge with another carrier — you’ll lose your miles.

Unfortunately, this also applies to miles you earn with a cobranded airline card. If you’re worried about the possibility of losing your miles, consider making your purchases with credit cards that pay flexible rewards. Look for programs that let you transfer points or miles to travel partners, including Chase Ultimate Rewards, American Express Membership Rewards, Citi ThankYou Rewards and Capital One Rewards.

When should I use other redemption options?

You should typically consider other redemption options if you can get a value of 1 cent per point or mile. If you get less than this rate, it’s probably a poor idea to go through with the redemption.

Unfortunately, most redemptions outside of travel, cash back and statement credit will give you uninspiring value. Merchandise is usually a poor choice, and many gift cards can be bad options. It can even be ill-advised to transfer rewards to certain loyalty programs, as you could get a low redemption rate.

How to calculate the value of your rewards

To understand whether you should go through with a redemption, calculate the value of your points or miles. Here’s what to do:

1. Visit your credit card’s rewards portal and look for a redemption option.
2. Find the value of the redemption.
3. Divide that value by the number of points or miles required.

Here’s an example. Say you find a $100 gift card that requires 10,000 points. To find if this is a good deal, simply divide $100 by 10,000. You’ll get 0.01, or 1 cent per point. That’s not a bad trade.

Now, what if the $100 gift card cost 12,500 points? Divide $100 by 12,500 and you’ll get 0.008. This is 0.8 cents per point — a mediocre deal.

Do these calculations with all redemptions, even the ones that seem straightforward. Even simple options might not give you the best value. An example is redeeming Amex Membership Rewards points for statement credit, which gives you a poor value of 0.6 cents per point.

Can I get a refund if I already booked travel with my rewards?

If you’ve booked a flight or hotel stay with rewards, you might be looking into a refund. Below, you’ll find some information to help you decide.

If applicable, you’ll also want to consider your credit card’s travel insurance, which might reimburse you depending on your travel plans.

Getting refunds with airlines

Many airlines are now allowing travelers to rebook eligible flights at no cost. You’ll likely find requirements to have booked a flight before a certain date and for certain dates of travel.

Keep in mind that most airlines will charge redeposit fees — the cost to return miles to your account — in the event of flight cancellation. That said, you might elect to simply change the dates of your travel instead.

Getting refunds with hotels

Most major hotel chains will let you get a refund on bookings made with points, as long as you opted for a refundable booking. Typically, you’ll need to cancel 24 to 72 hours before arrival.

As always, rules may vary depending on the specific hotel you’re staying at. If you’re in doubt, check with the hotel directly.

Getting refunds with credit card issuer reward programs

If you want a refund for a booking you made through your card issuer’s rewards program, know that your issuer will probably defer to the airline or hotel’s cancellation policies.

For example, if you want to cancel your flight, an airline’s cancellation fees might apply before you get your refund. That might mean you receive fewer points or miles back than you initially spent.

In some cases, you’ll receive your refund in the form of statement credit — as is the case with Amex Membership Rewards.

Should I try to earn more rewards right now?

If you’re already earning rewards from your credit card, there’s no reason to stop doing so for purchases you make regularly.

Whether you should try to earn additional cash back, points or miles depends on your overall strategy for rewards redemption. If you think you’ll quickly use rewards after you earn them, for example, it could be worth shooting for a signup bonus. Otherwise, you might feel uncomfortable earning a signup bonus only to have your rewards sit around unused.

Another factor to consider with a signup bonus is whether you can meet the spending requirement. With decreased activity all around us these days, you might simply have fewer things to use your credit card for. It would be a big waste to open a card and miss out on the signup bonus.

Looking to earn rewards? Compare the top credit cards to meet your needs.

Bottom line

Whether you should redeem your credit card rewards depends on your situation as well as what type of rewards you have. If you have a cashback card, consider redeeming now. But if you have a travel card, you might be better served by keeping your rewards.

Stay updated with breaking news and how to protect yourself by visiting our coronavirus hub.

Frequently asked questions

• How do I redeem my credit card rewards?

  Log in to your online credit card account and navigate to the rewards portal. Alternatively, give your card provider a call.

• Can I transfer my points or miles?

  This depends on your issuer or loyalty program. Some of the major card issuers allow transfers to select travel programs. Travel programs, meanwhile, may allow transfers as well — but you’ll often get a poor value for this.

• Will I always get a 1-cent-per-point-or-mile redemption rate for cash back?

  No. Points or miles can sometimes be worth less than that rate for cash back or statement credit.