The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: jeromedawg on February 05, 2021, 06:34:01 PM
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Hey all,
Just curious what you guys do as far as cashing out your CC points and how frequently or at what $/pt amount threshold you do it.
Do you typically just pay off any statement balances first, then transfer the remaining $/pts to your investment account and buy index funds, for example?
Or do you look for the deals on gift cards (like 10% off Home Depot, Amazon, grocery stores, etc) and buy a bunch of those if you have 'anticipated' purchases then transfer the rest to your investment accounts?
Any benefit in keeping any points in the account? I know sometimes Amazon has % off discounts when you pay with points (and you can apply a minimum of 1pt/1cent to your purchase to get say 20% off through Amazon if you qualify for the offer). That's the only 'benefit' that comes to mind, and that would only require a running balance of 1 point at that point lol.
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It depends on the card. My preference is statement credit, then cashback direct deposit. I never do the gift cards, though. Although your list seems practical, I have never actually noticed any to places that I shop, so I stopped looking.
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Agree depends on the card. DoubleCash, for instance, I always do direct deposit because a statement credit will reduce the next month’s rewards.
But I’ll often spend dollars on gift cards if given the option because they boost the rewards. Discover It gives a 10 or so percent boost on a wide variety of gift cards. I’ll definitely use Home Depot, Ace, Chipotle, some others throughout the year, so I don’t consider it limiting.
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Any benefit in keeping any points in the account? I know sometimes Amazon has % off discounts when you pay with points (and you can apply a minimum of 1pt/1cent to your purchase to get say 20% off through Amazon if you qualify for the offer). That's the only 'benefit' that comes to mind, and that would only require a running balance of 1 point at that point lol.
Yes, I do this - I keep 1 Discover point and 1 Chase UR just in case I qualify for an Amazon deal.
For cash-only rewards, I cash out at the first available opportunity as cash-back to the card. I prefer cards with no cash-out minimums to those that require $25 to redeem.
For travel-based points/miles, I keep until it makes sense to redeem for travel.
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Any benefit in keeping any points in the account? I know sometimes Amazon has % off discounts when you pay with points (and you can apply a minimum of 1pt/1cent to your purchase to get say 20% off through Amazon if you qualify for the offer). That's the only 'benefit' that comes to mind, and that would only require a running balance of 1 point at that point lol.
Yes, I do this - I keep 1 Discover point and 1 Chase UR just in case I qualify for an Amazon deal.
For cash-only rewards, I cash out at the first available opportunity as cash-back to the card. I prefer cards with no cash-out minimums to those that require $25 to redeem.
For travel-based points/miles, I keep until it makes sense to redeem for travel.
What do you prefer for points/miles? A bulk of my points/cash are with Chase UR. I have some with Discover and Amex. I do have CapitalOne Venture One (travel) but barely ever use that.
I forgot about Chase's "Pay Yourself Back" option too - seems like for certain categories (currently it's certain charitable organizations), your point/$ power increases
https://thepointsguy.com/guide/chase-pay-yourself-back/
Of course, it doesn't seem like they have any sort of 'calendar' for what categories are coming up and it seems sort of random in terms of what categories they choose to qualify for it.
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Before chase started the pay yourself back feature cashing points in for a statement credit or a gift card was the equivalent of the suckers bet. You'd get the lowest value by doing this. Because of this I never cashed points in and would just use them for travel. With the Pay yourself back feature you can get the same 1.5 redemption value as using the points for travel or a statement credit in certain categories. In the last year I've probably cashed in about $2500 in UR points, but I'm currently sitting on about 1 million. I like to keep a nice size nest egg of points because we love to travel so much. I always recommend people to use their points for travel because that is where you will get the most value. If you don't travel then save them and take a nice trip after the pandemic is over!!!
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Before chase started the pay yourself back feature cashing points in for a statement credit or a gift card was the equivalent of the suckers bet. You'd get the lowest value by doing this. Because of this I never cashed points in and would just use them for travel. With the Pay yourself back feature you can get the same 1.5 redemption value as using the points for travel or a statement credit in certain categories. In the last year I've probably cashed in about $2500 in UR points, but I'm currently sitting on about 1 million. I like to keep a nice size nest egg of points because we love to travel so much. I always recommend people to use their points for travel because that is where you will get the most value. If you don't travel then save them and take a nice trip after the pandemic is over!!!
I thought that points for travel via Chase was only a better value with the Sapphire card that has the annual fee, no? The regular Chase cards don't offer as good a redemption value on points for travel otherwise (at least, no better than just cashing out on them). Am I missing something?
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What do you prefer for points/miles? A bulk of my points/cash are with Chase UR. I have some with Discover and Amex. I do have CapitalOne Venture One (travel) but barely ever use that.
I forgot about Chase's "Pay Yourself Back" option too - seems like for certain categories (currently it's certain charitable organizations), your point/$ power increases
https://thepointsguy.com/guide/chase-pay-yourself-back/
Of course, it doesn't seem like they have any sort of 'calendar' for what categories are coming up and it seems sort of random in terms of what categories they choose to qualify for it.
For travel, I have a stash of American/United/Delta miles, IHG/Marriot points, plus AmEx MR from sign-up bonuses. I don't put daily spend into getting miles for travel, because it's not cost-effective for me.
For daily spend, I prefer cash back. I only have a Chase Freedom from long ago, so I don't use UR for travel. I put some spend on the Freedom and Discover, based on the 5% categories. I use BOA cash rewards cards to get 3% on gas and dining, if not 5% categories. I use an AmEx Blue Cash Everyday for 3% on groceries, if not a 5% category. Then a CapOne Quicksilver for 1.5% on everything else unless I'm trying to meet min spend on a new card.
I thought that points for travel via Chase was only a better value with the Sapphire card that has the annual fee, no? The regular Chase cards don't offer as good a redemption value on points for travel otherwise (at least, no better than just cashing out on them). Am I missing something?
That's my thought too, since I only have a Freedom and have been locked out of the better travel cards because of 5/24. Even if I do eventually get a Sapphire, I don't pay annual fees on cards, so I would have to strategically use the bonus on travel before canceling and returning to my usual cash-out strategy.
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As others say, it depends on the card. I just use mine for statement credit to pay back purchases I've made with the card. Also, because there's no incentive with my card for redeeming large amounts of points vs. a smaller amount, I frequently redeem the points. I don't trust credit card companies enough to count on them not suddenly changing the program and devaluing the points in the future if I were to save my points up indefinitely.
I also ignore any of the %off discount offers because I don't like the idea or being enticed into buying stuff I wouldn't have bought anyway at full price, and for my card the point value is the same as money back for me anyway, so purchasing anything through their site is a hassle I do not need.
If I ever saw that I had enough credit card points to consider transferring to an investment account, I'd want to look over my statement and return a bunch of stuff because clearly I'd be spending way too much and should be investing more of THAT money. I can imagine that some people may like the idea of investing points as a mental trick similar to those "round up and invest the difference" apps but I'd rather just spend less in the first place.
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I always do direct deposit because a statement credit will reduce the next month’s rewards.
Wait, how so? I thought the points were earned on your spend regardless of how you pay. How is it that if you use your points/cash to pay the statement credit off (even in full) you are still somehow "reducing" your rewards?
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Generally, you’re right, but again it depends on the card. The Citi DoubleCash earns 1% when you purchase and 1% when you pay. So if you use awards to reduce your bill, you reduce accordingly the points you earn on the back end. I don’t know any other card that works this way, but it’s an example of one that I redeem differently based on the particulars of the card.
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Generally, you’re right, but again it depends on the card. The Citi DoubleCash earns 1% when you purchase and 1% when you pay. So if you use awards to reduce your bill, you reduce accordingly the points you earn on the back end. I don’t know any other card that works this way, but it’s an example of one that I redeem differently based on the particulars of the card.
Ah ok, so if I understand correctly with the DoubleCash card you have to pay the 'standard' way which is from your bank account in order to get that 1% since paying down your statement with existing reward points/cash doesn't earn you that 1%
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Correct. They discuss it here: https://www.nerdwallet.com/reviews/credit-cards/citi-double-cash