Some credit cards (e.g. Capital One, Chase) have rewards programs for using their cards, which can either be used for cash (credit to the credit card itself) or for 3rd party vendor credit (a gift card, or some other form of payment to some vendor).

But it seems to me that I have never seen the rate be different than 1 to 1.

So, why would one ever choose credit that only can pay a specific vendor? Even if I was about to make a purchase at that vendor, having a gift card or other unusual method of paying for a purchase seems in all ways less convenient (since the card itself can be used to make purchases too, and earns more rewards when doing so, so why would anyone who understands their choices ever choose anything but cash / credit to the credit card? (Other than, they want a gift card to actually give to someone... which are also easily available in other ways.)

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    Because there are a lot of people who aren't all that smart?
    – jamesqf
    Commented Sep 7, 2019 at 0:43
  • Right now, Chase is offering certain gift cards on 10% sale (1800 points for a $20 gift card up to 18,000 for $200, etc)
    – user662852
    Commented Sep 9, 2019 at 14:22

6 Answers 6


Differentiated Point Systems

A few cards, such as the Citi Rewards + card, give different value to the points depending what you use them for. Generally you get the highest ratio of points to spending for travel and entertainment (1-2 cents per point), a slightly worse ratio for gift cards (0.9-1.1 cents per point), and the very worst for statement credit (0.6-0.8 cents per point).

Credit vs Capital

Additionally this may make sense if a credit card has an promotional 0% interest rate which applied to purchases made in a particular month and the user is intentionaly using this rate as a free loan. Given statement credit does not usually count towards minimum payments there could be a situation where the interest saved or oppertunity cost by keeping the balance on the card and paying it off more slowly could exceed the potential cashback lost from using gift cards to pay ones current expenses.

Edge Cases

The only other pathalogical situation I could potentially think of is that if one wished to make an extremely large purchase, which was going to exceed their credit limit, and gift cards or a deal allowed them to make the purchase in a single transaction where the merchant would not accept the use of multiple payment methods.

Psycological Causes

Other than that I cannot see any other financial reasons one would do this, assuming the items offered as rewards are otherwise generally available for purchase. There may however be psycological reasons, for example if someone with otherwise poor saving skills saves their points for several years to make a disgressionary purchase such as a vacation they did not have the discipline to save for in cash.

  • Would the downvoter care to suggest what I might improve? I'm not sure if my answer is missing anything important
    – Vality
    Commented Sep 7, 2019 at 18:48
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    Thanks. I didn't downvote you or the other answers which mention there are rewards with other than the same rate for cash. So I don't know who downvoted or why. Perhaps it's because while these answers do partly answer by saying there are some other cards and rewards that give some better rates or benefits, there's no comment on the rewards that don't seem to offer any (or even less) benefit to the customer over taking cash.
    – Dronz
    Commented Sep 7, 2019 at 20:07
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    @Dronz Good point. I guess I was implying there was no value in if that was the case. But ill try and amend my answer to more clearly state that. :)
    – Vality
    Commented Sep 7, 2019 at 21:10
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    The Credit vs Cash notion seems like the only reason anyone has mentioned that seems like a general answer to the many examples I see (e.g. seemingly all Chase Rewards gift cards) where the rate is identical and there seem to be no perks. Overall there seem to be almost zero real customer incentives to get these rewards that don't have a rate better than the cash rate.
    – Dronz
    Commented Sep 8, 2019 at 18:03

But it seems to me that I have never seen the rate be different than 1 to 1.

Then you haven't been looking at very many cards. If I check the Discover card website, I see can get a $100 certificate for a particular home improvement store for only $90. If I know I need a item, and I can already get it on sale there, then I can purchase it for an even better discount if I turn my cash back into a gift certificate. It is easy to get multiple certificates at the same time.

When I know I am going to be making a big purchase, and am trying to pick the store, I will sometimes spend a few minutes to see if I can get a better deal using a particular combination of card, store, and certificate.


The Tesco Club Card in the UK, admittedly a loyalty card rather than a credit card, gives a three-to-one exchange rate on using rewards for affiliate purchases rather than taking them in cash. I regularly take a day-trip through the Channel Tunnel to France for £20-worth of Club Card rewards instead of £60 in cash.

  • That's nice and interesting, though is more an example of the sort of thing I would hope and expect to see, while in my own (limited) experience I have never seen such a thing, and so I'm relieved that sometimes there is actually value in some rewards for some people.
    – Dronz
    Commented Sep 7, 2019 at 20:02

Before I went with a straight cash-back card the card I used sometimes had sales in their rewards shop, so you could buy gift cards at a better rate than what cash-back would provide. So your premise that cash-back is always the most efficient is faulty. Even without sales, for many people cash-back is not fun, and rather than do math about what is more efficient they would prefer to have fun with their "reward".

The 'forced saving' aspect of my initial answer still holds, people might choose a less efficient reward redemption because they want to feel okay about spending money at a specific vendor. Thinking of rewards as "free money" is similar to the way some people think about tax refunds.

Edit: I misinterpreted the question, and particularly the quoted section to mean why choose anything other than a cash back card.

So, why would one ever choose credit that only can pay a specific vendor?

My wager is that a lot of people who use co-branded travel rewards cards do so because it is a no-discipline way to save for vacations. Certainly you could just save 1-2% of all spending for vacations, but with rewards points the saving for travel just happens.

Another factor is that travel rewards cards can offer other perks that, in conjunction with miles/points, could end up being more valuable than cash back. For example airline status, free upgrades, or free checked bags.

As for non-travel co-branded cards for some it's probably the same no-discipline saving for a specific store, but I bet a lot of people sign up due to a promotion (you can save $100 today if you sign up for the card), and never really evaluate whether or not they could be getting more bang for their buck with a different card.

Anecdotally, I had a card with pretty shoddy rewards for years because I was unaware that there were significantly better options and even a while after I knew there were better options because I didn't want to rock the boat on my credit score while buying houses. I have a decent card now, but I know I could save more by leveraging a few different cards that have benefits in specific categories, but I don't want to hassle.

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    OP is asking not about the choice of credit card, but about the choice of rewards from a given credit card. That is, if the same credit card offers 2% cash back or 2% gift cards back, why would anyone choose the gift cards?
    – nanoman
    Commented Sep 7, 2019 at 2:42
  • @nanoman I interpreted the quoted section to mean why choose a credit card that can only pay a specific vendor, which is most co-branded cards where the rewards are only useful with that vendor. Re-reading I see that I was confused by the wording choice.
    – Hart CO
    Commented Sep 7, 2019 at 14:25
  • I actually upvoted, since you mention the possibility that sometimes they do offer a better rate, and the forced saving idea is creative. However @nanoman is correct about what I meant - I meant with a generic credit card that offers various reward options for other vendors but they all seem to be at the same rate as taking cash (except cash is not only more flexible but using it also generates more rewards).
    – Dronz
    Commented Sep 7, 2019 at 20:12
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    @Dronz Yeah above the 'Edit' part was meant to address the actual question, but left my original answer since it's somewhat relevant, at the end of the day a lot of people just do what they've done without considering efficiency.
    – Hart CO
    Commented Sep 7, 2019 at 21:08

You're right; generally you're better off taking the cash back in the form of a check or statement credit. (Though occasionally you'll find exceptions where you can get better than 1 to 1 on a non-cash redemption.) Here's an example that shows why: suppose you have a $100 CC credit coming your way, and one of your options is a $100 Best Buy Gift card, and tomorrow you're definitely going to spend at least $100 at Best Buy. Even in this case you should prefer the statement credit over the $100 Best Buy gift card, because:

  1. If you take the gift card, you get something worth $100.
  2. If you take the statement credit, you can now go purchase the Best Buy gift card, and you get something worth $100 + your CC credit rewards (if your rewards are 2%, you would now have something worth $102).
  3. If you take the statement credit, you can go purchase the items directly at Best Buy and still earn the same $100 + 2% = $102.

I suspect the only reason someone would choose a specific gift card in this situation is due to laziness and/or convenience, especially on smaller items such as $25 gift cards that only would yield 50 cents cash back.

One contrived scenario could be if you have a very large number of rewards to cash. Suppose you have $5K in rewards, but your credit limit on your CC is only $1K. If you wish to spend $5000 tomorrow at Best Buy, you might be better off with a $5K gift card rather than having to bring $4K in cash.


Gifts and/or spending for kids.

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