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As far as I can tell, most reward point programs are confusopolies. I have a difficult time figuring out how much my points are really worth since the exchange rate seems to vary depending on what you are using them to buy. The fact that points can expire also affects the value of the points.

Is there any way to spend the points that results in most bang for the buck? Should I spend my points on:

  • Travel: Airline tickets, rental cars, hotel stays, etc?
  • Swag: Ebook readers, GPS receivers, Blu-Ray players, etc?
  • Gift Cards and gift certificates?

Does it matter? Any thoughts?

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Most points cards will let you redeem the points for cash or a statement credit. Figure out how many points equals a $1 redemption. This will give you a base "points to dollars" conversation rate. (It also tells you the effective cash back rate of your card.)

Now look at the merchandise you can buy with the points. Find a few things you are interested in. Find the retail value of that merchandise on Amazon.com. Use your points-to-dollars ratio to find the effective price of redeeming the item. See if it is "cheaper" to buy with points or to buy from Amazon.

You can do a similar price comparison for non-merchandise items (airline tickets, hotels, etc). Just compare it to the base points-to-dollars ratio.

Look at the redemption rate of gift cards too. There are often deals where you can buy a $50 gift card for effectively $45.

If you can't find a good use for the points, then just redeem them for cash.

You should also pay attention to the effective cash back rate. If it is consistently less than a regular cash back card, perhaps you should consider switching.

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    +1 Good technique. For the card I had that didn't directly have a cash/credit redemption, they did have gas station coupons and grocery store coupons. I considered those almost-cash since it's stuff I'd buy anyway. That let me set a "value" for the points to calculate if the electronics, etc. were a rip-off as you say.
    – Chris W. Rea
    Aug 13, 2010 at 17:39
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Cash is King (usually this refers to cash flow, but I think its true for reward programs). That is, get a card with cash rebates - cash is fungible and you dont get locked into one place to "redeem" your points. Plus you dont waste time trying to figure out the best bargin.

I'd suggest the American Express Blue Cash credit card. If you have a good credit score they'll approve you and I've found amex to have great customer service.

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  • Seconded on AMEX's customer service. Usually will go out of their way to make sure you have a good day.
    – Lee
    Aug 19, 2010 at 17:25
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Gift Cards and Gift Certificates are best option as you get to decide from a wide variety of items to buy, plus you can buy an more priced items and pay partly by cash. This way you would use it only to buy items you need. If you buy the goods, lot of times the warrenty becomes an issue and anyway they would cost more as card companies get these at discuount and sell it a list price.

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My card offers cash. I like knowing there's a direct conversion to cash value of my rewards points.

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  • Same. Also, I get 5% on gas/groceries after spending $N thousand in a year.
    – user296
    Aug 12, 2010 at 20:21
  • @fennec: Which card?
    – f1StudentInUS
    Feb 27, 2013 at 16:33
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I would say opting for cards that will cut you a check (ie: American Express TrueEarnings Costco or Amazon Rewards) or that apply points to a frequent flyer account (ie: CitiBank American Airlines). I've gotten a fair chunk of change just from the AMEX and Amazon cards.

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I've done best financially using points to rent cars. I made a 1 week rental car for points when the equivalent "swag" was all priced around $100. I couldn't find a rental car for under $250 at the time.

Finding these market inefficiencies is where you'll get the best bang for your buck (or points).

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  • Did you have to go through a specific site to claim such swag? I would appreciate some details, like the card you used and what site, if any, you had to place your claim through
    – f1StudentInUS
    Feb 27, 2013 at 16:32

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