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I earn points on my credit card and can redeem them at one cent per point, so if I have 10,000 points, I can deduct $100 from my bill.

Is there any advantage to saving my points and spending my money? I can see the psychological advantage of eventually being able to realize, "Wow! I have so many points that I can take a fancy vacation," but nothing else. If "should" is too strong, what would be the pros and cons of saving my points versus saving my money?

(There's this issue of only being able to redeem in blocks of 2,500 points, so I would redeem 12,000 points for $100 plus 2,000 points that can be redeemed once I earn another 500 points, but I don't think this changes much.)

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    Some people benefit from structured or from forced savings, reducing the chance of spending money. If the credit card offers no additional benefit to accruing points then unless you perceive some psychological advantage, then it makes no difference what you do. – Bob Baerker Jan 1 at 20:29
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    Many cards have multiple redemption options each of which value the points differently. For example, one popular card lets you redeem 10,000 points for either a $100 statement credit OR $150 spent in their travel portal. – Ben Voigt Jan 1 at 20:33
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    That might depend on if you have debt and -- and follow -- a budget. I have no debt and strictly follow a budget. Thus, I immediately turn points into cash and put it into the "Miscellaneous Spending" line item for that month. If I had debt, then I'd throw that $100 at the debt with the highest rate. – RonJohn Jan 1 at 20:48
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    Money can earn interest or be invested. Points can’t. It’s probably best to convert to cash unless you get the psychological benefit of saving up a big batch of points. – Dugan Jan 1 at 21:25
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    Points can vanish at the whim of the company. Once they’ve been converted to cash, that’s not possible. – prl Jan 2 at 0:50
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Pros of Saving Points

  • When you do decide to redeem them, you won't have to worry about meeting the minimum threshold.
  • If there are "specials" for redeeming (like getting discounted gift cards) you'll be positioned to take advantage of them.
  • It might feel better to be getting "more" all at once
  • This doesn't sound like it applies to you, but for some point cards, the best value comes from redeeming the points for something else, like the notable high-end travel cards where you get a 25%-50% bump in value, or even better, 1:1 trading into direct airline/hotel/travel program points. In this case, saving until you have enough for a proper redemption is probably the way to go.

Cons of Saving Points

  • Their value is doing nothing for you until redeemed.
  • Some points programs have an expiration date for points. If yours does, you need to keep a close eye on the rules. How long are they good for, does the date "extend" if you continue earning new points, is there an easy way to see how many points are expiring when (that's the kind of thing they don't like to make easy).
  • Cards can and regularly do change their point systems, sometimes gutting previous value. You could find that your long-saved points are suddenly worthless, or can only be redeemed for a less-desirable reward. Example: the Uber Visa has a number of changes coming, the worst of which is that you can only redeem its rewards for "Uber Cash" and not, you know, actual cash.

Conclusion

There are more pros in the list but except for the last one, they are weak.

Don't save points unless you have a compelling reason to, like getting a higher value out of the redemption by trading for other rewards points or booking travel or something.

You're better off with the cash.

One other note that doesn't really fit into the debate, if your card has an option to redeem for something that it earns a high reward rate on, redeem for cash instead. For example, the Amazon Visa. Yeah you could get a $100 Amazon credit and then you can feel like you're getting a "free" $100 purchase. Or you could earn 5% on the $100 purchase and get a $100 deposit in your bank account.

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  • Keeping points mean you have to, at minimum, save your membership. Worse, you need to actively get more points, make sure nothing is going to cut their value due to rule changes, and basically maintain it. If you enjoy maintaining it then go for it. If it wastes your time and stress you out, just spend it and forget about it. – Nelson Jan 2 at 3:51
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    It is also worth checking whether there is an expiration time for the saved points. – Vlad Spreys Jan 2 at 3:56
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    That last paragraph is a great thing I hadn't thought of; spending the points directly robs you of the extra cash back you would be getting if you spend it as cash! – GendoIkari Jan 2 at 5:33
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    Great example with the Amazon Prime points. In case anyone's interested, in this example if you use your points towards future Amazon purchases instead of cash back, you are effectively reducing your 5% to 4.76%. – TTT Jan 2 at 16:42
  • @VladSpreys great point, added to the list, thanks! – briantist Jan 2 at 16:46

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