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Gift cards are an easy Christmas gift idea for multiple reasons. You can show you put some thought into what a person likes, while still letting them choose something they prefer. You also avoid gifting them something they already have. To save money this Christmas, you might redeem credit card points for gift cards. Plus, you’re practically getting free gift cards because you use purchase rewards. However, is this the best use of your points?
The answer depends on what other rewards options you have. You should also compare the value of each point for gift card awards to the other reward options.
When It Makes Sense to Redeem Credit Card Points for Gift Cards
There are a few times when you should redeem credit card points for gift cards.
These are a few instances:
- Gift cards require the same amount of points as other award options
- Gift cards require fewer points than cash rewards
You might also decide to redeem point for gift cards when you don’t want to spend new money. But, make sure the redemption value isn’t significantly lower than cash or travel reward options.
Redeem Points for At Least One Cent Each
At a minimum, each point should be worth at least one cent each. This is the standard benchmark for redeeming rewards points. That means a $10 gift card must cost 1,000 points or less. A $25 gift card costs 25,000 points or less.
Let’s say a $10 gift card costs 2,000 points. In this case, your points are worth 0.5 cents each — 50% less than the industry average. While it’s better than making a new purchase, it’s probably not the best value for your points.
Redeeming Credit Card Points for Gift Cards: How Many Points?
Many rewards credit cards offer gift card redemptions. We’ll look at a few of the most popular credit cards to see how many points you might spend when interested in credit card points for gift cards.
Chase Ultimate Rewards
You will possibly find the best value with a credit card that earns Chase Ultimate Rewards. The three card families that earn this currency are Freedom, Ink Business, and Sapphire. Regardless of which reward you choose, your points are always worth at least one cent each.
Chase sometimes offers gift card redemption bonuses for select brands. Take the Nordstrom picture below for instance. In this example, this brand is discounting these cards 10%. In this case, your points are worth 1.1 cents each instead of the standard 1 cent each.
Redeeming points for gift cards can make more sense if you have either the Freedom or Freedom Unlimited. Alternatively, a no annual fee Ink Business card like the Ink Cash or Ink Unlimited is also worthwhile. These four cards don’t offer a travel redemption bonus or 1:1 point transfers.
With the Sapphire Preferred, Sapphire Reserve, and Ink Business Preferred, you can find more value redeeming points for award travel. Your points are worth at least 1.25 cents each because you get a redemption bonus when booking travel through Chase or you can transfer your points on a 1:1 basis. Maybe you want to keep these points for yourself or book award travel for your friend instead.
American Express Membership Rewards
If you own an American Express like the Platinum Card that earns Membership Rewards, the answer depends on which retail brand you want.
Membership Rewards points have a maximum value of 1 cent each for gift cards. As you see below, most gift cards cost 1 cent per point. But, a few brands like Starbucks and The Cheesecake Factory fall below the 1 cent value.
It makes sense to redeem your points for gift cards when your Membership Rewards points are worth one cent each. This is the same redemption value as trying to book award flights on AmexTravel.com.
Most non-gift card and air travel rewards with Membership Rewards make each point worth between 0.5 and 0.7 cents each. For instance, redeeming 1,000 points for cash statement credits is only worth $6.
Like Chase Ultimate Rewards, you might find more value transferring your points to an airline transfer partner instead of redeeming them on the Membership Rewards portal.
Barclaycard Arrival Plus
If you have the Barclaycard Arrival Plus, save your miles for travel statement credits. For travel redemptions, your miles are worth 1 cent each and you get 5% of your redeemed miles back for your next redemption.
Gift card redemptions start at 5,000 miles for $25 card balances. Each mile is only worth 0.5 cents each. This isn’t a good redemption option.
One benefit to buying gift cards with your Barclaycard Arrival Plus® World Elite Mastercard® is that you earn 2 miles per $1. Most credit cards are only going to give you one mile per $1 spent on gift cards. Then, you can squeeze the 5% travel redemption bonus from the points you earn.
With Capital One, you must decide if you want travel rewards or cash rewards. The QuickSilver card family focuses on cash back. For the Venture card family, you can redeem Venture miles for future award travel, travel statement credits, or gift cards.
In many cases, Venture Miles are most valuable for travel rewards. Capital One QuicksilverOne Cash Rewards points are best for cash statement credits. But, you can find gift cards rewards that start at one cent per point. Therefore, 1,000 miles can buy a $10 gift card for many retailers.
The lets you begin redeeming points for gift cards with a $20 awards balance. Your points are worth one cent each. Like other credit card rewards programs, Discover sometimes puts certain gift card brands “on sale.”
This is a tiered rewards card that offers 5% back on rotating quarterly categories. Non-bonus categories earn 1% back. They also have an intriguing new member bonus where the match 100% of the purchase rewards you earn during your first year of card ownership. For instance, if you earn $1,000 in purchase rewards during your first year, Discover matches the amount and you have $2,000 in credit card rewards points instead.
If you’re thinking about next year’s Christmas gifts already, you can start banking up the points today to have your award balance doubled.
Summary of Using Credit Card Points for Gift Cards
Buying gift cards with credit card points is a free way to buy Christmas gifts for others. But, you should only do so when the redemption values make sense. If your points are worth less than 1 cent each, consider paying cash for gift cards instead. In most cases, it’s a better use of your hard-earned credit card points for gift cards.
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