How To Cash Out Points For The Best Rate Possible
Yesterday I shared with you how I had recently gone crazy and cashed out all of my points. I shared various reasons with you on why that worked for me. It doesn’t mean it will work for you but it is something to consider. With the constant devaluations of airline and hotel programs, plus the increase in cash out rates, the waters have never been more muddied between the two options. That extraordinarily wide gap in value between travel and cash has narrowed considerably over the last few years. Because of that, and because a few people asked me about it, I figured I would share how to cash out points for the best possible rate with you.
How To Cash Out Points: Best Practices
I will go through each of the three major programs and share with you the options available to you and highlight the best option as well.
Chase Ultimate Rewards
First up is Chase and their Ultimate Rewards program. I find Chase to give you the most options of the three and also the most valuable option as well. Let’s take a look:
- Cash out points at 1 cent a piece via gift cards (sometimes they increase this rate to above 1 cent a piece with promos).
- Cash out Ultimate Rewards at 1 cent a piece to pay your credit card or to your checking account etc. You can do this in the Ultimate Rewards website when logged into your account.
- Pay Yourself Back for increased cash out rates of 1.25 or 1.5 cents per point. This works as a purchase eraser for certain categories (grocery, home improvement and restaurants). This is slated to end at the end of April but it could be extended again.
The best option is using Pay Yourself Back for the increased rate. I upgraded my wife’s Freedom card to a Sapphire Reserve to get the 1.5 cents per point rate. The increase in fee was more than offset by the increased cash out rate vs 1.25 cents with the Sapphire Preferred or Ink Business Preferred.
During normal times I would never use the gift card option, unless you are getting a promotion boost, since you can just cash out the points at 1 cent each. You could then buy the gift card with a credit card, earn more points, and pay it off with the money you cashed out. You come out a little ahead this way.
American Express Membership Rewards
Amex is the next easiest to use but it comes with a big annual fee to be able to maximize it. Let’s take a look at the options:
- Cash out via gift cards at up to 1 cent a piece. Most will offer you less value than that.
- Use the Charles Schwab Platinum to cash out at 1.1 cents a piece directly to your investment account. You can then withdraw this to your bank account.
I didn’t include the normal statement credit option because it is so poor that it isn’t worth mentioning. I had waited to sign up for the Charles Schwab Platinum until I had a big enough Membership Rewards balance to make cashing out worth it. That is because the card comes with a $550 annual fee. The 60,000 point welcome offer offsets that in the first year, plus some, so I think it is best to wait until you are ready to cash out some points. This way you are not paying to carry something you won’t use a ton.
Now, if you carry an Amex Platinum card all of the time for the perks etc. then this should be the one. You get all of the same lounge access and credits but also the option to cash out your Membership Rewards at an increased rate. You get the bonus cash out rate for the same cost as the traditional Platinum. You do need to sign up for a brokerage account before being able to grab the card. Here is Benjy’s step by step guide on how to cash out your points with the card.
Citi ThankYou Points
Citi ThankYou points offer the least valuable options, as well as, the most cumbersome process. Just another reason they are my nemesis currency. I will say that their earning rates are very solid which will make the effort worth it for many. Here are the options:
- Redeem your points for gift cards at 1 cent a piece. They sometimes offer increased rates with promotions as well. If you pair this with the Citi Rewards+ 10% rebate you can get more than 1 cent per point.
- Cash out your points with a Citi Premier card at 1 cent a piece.
- Use your Citi Prestige to cash out points at one cent a piece.
I didn’t have much of a balance of ThankYou points to begin with but should have 60K coming my way from the Citi Premier card. I may just get gift cards for my home improvement project because it is easiest. That is probably slightly less than 1 cent a point because you can often purchase home improvement gift cards at a discount. But if I downgrade my other Premier to a Rewards+ card I should get 10% of my redeemed points back pushing me back above 1 cent a piece.
If I don’t go that route then I will do the mortgage payment option. I am not sure if this route triggers the 10% rebate on the Citi Rewards+ though. Since I just grabbed the Premier I am not eligible for the Prestige welcome offer for 24 months. I could stockpile ThankYou points for a few years and then go that route as well. Then if any travel comes up that I could use them for I have it covered. As you can see, this is still a work in progress.
How To Cash Out Points – Final Thoughts
Of the three options, Citi ThankYou points are the biggest pain to deal with but they also hurt the least to cash out (for me at least). Especially with the travel portal 25% bonus going away, cashing them out is an easy decision for me most of the time.
The other two hurt some when I cash them out, Ultimate Rewards probably hurt the most though. It is hard to get their welcome offers and that means earning is mostly through spend. For American Express I can get welcome offers, referral bonuses, spending bonuses etc. So they are the easiest of all of the points to rack up in my opinion.
Hopefully this gives you a better idea of how to cash out points at the best rates and also how I went about doing it. If you have any questions let me know.
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If you are only accruing Ultimate rewards via spend, that is never good value unless you get visa gift cards at staples with your Ink card
You are better off moving an IRA to Merrill and then getting the BofA premium rewards with Platinum honors = 2.2625% cash back (1.5% + 75% bonus)
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Even when you get 5x at Office stores with gift cards = cost 7$ usually for 200$ card + 5$ lost cash back when liquidating card = 11$ for 1000 points = 1.2c minimum
Paying 1.2c then trying to get 1.5c value at most with Ultimate rewards groceries is not worth it
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Amex is never worth it unless you get 3X or 4X under some categories – even then you are paying 0.6-0.8c each for the points, but the cash out is at least double the acquisition cost
If you are just using the Business Plus for 2X points – cash out 2.5c – that is worse than BofA
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Even Citi Double Cash is never worth it unless you do not have a BofA account
A lot of this math is off. The cards at Staples are only bought when they are fee free and I am not sure where the $5 liquidation cost comes from since that is way off. It is below $1 and that can be spread over multiple cards. It blows 2.625% out of the water.
For Amex it is easy to rack up 4X or better with their program so in that situation it would be useful.
A lot of assumptions here that simply do not track.
I put MR a distant third. If you don’t/can’t spring for the Schwab conversion, you take a bath. Even TYP can be exchanged up on a good gift card deal. I’m in the game for cash only so UR comes out on top, TYP (to SYWP) next and MR dead last. I’ll add offers to my cash back AMEX cards before the MR earning ones. YMMV
I would agree if you do not have a Schwab Platinum. That is why I would suggest building up the stash first and then getting the card and cashing out if that was your goal.
Any idea if Sears Citi cares about if you buy store gift cards or even vgc’s for when they run their offers?
If you mean using the card at the grocery/gas station to load up on G/C, no they don’t care. I love that card because they never care what I buy with their unbelievable offers. That card is a sleeper.
I agree with Dave – never heard of any issues with that.
Definitely if it gets extended I may look into the PYB.
Hello Mark. Timely and informative article. All last year and into this year I have cashed out my Chase Ultimate Rewards to pay for groceries and to a lesser extent restaurants. Hopefully, Chase will extend this perk as we are not out of the woods yet. Chase is wisely being proactive to keep the Amex people at bay.
Also, when my Chase Sapphire Reserve card came up for renewal just a couple months ago at $450, I was surprised. A call to Chase and they were kind enough to give me a $150 renewal credit on top of the lower annual fee.
That is awesome Ron – hard to beat that card for a net zero cost with the travel credit.