By Stephanie Miller


5 Min. To Read

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These days, most credit cards – and especially the most popular ones – offer rewards to cardholders. These rewards come in many forms and can be earned in any number of ways. One of the biggest questions, though, comes when it’s time to actually redeem those earned rewards.

Most rewards cards will offer customers the ability to choose how they want to, ahem, cash in their earnings. And cash back (in the form of a check or statement credit) is almost always an option. But with all the amazing things you can and experience with earned rewards, is cash ever really a good option?

Let’s take a look at why and when you’ll want to cash in your rewards for, well, cash… and when you will want to reconsider.

When There’s No Option

There are times when you don’t even have a choice for your rewards redemption, so you’ll need to take the cash. Cards like the Blue Cash Preferred from American Express, for instance, only give you the option to cash in your earnings for a statement credit. Once you reach $25, you can choose to redeem your accrued rewards or simply keep earning.

In this case, it’s up to you when you cash in. If you have something special that you’re saving up for or know that a big expense is coming, having a few hundred dollars at the ready can be helpful. Or, of course, you can cash in and enjoy that money along the way.

Sure, cards like the Blue Cash Preferred offer excellent rewards on groceries and gas. However, they might not be ideal if your plan is to hoard miles or points for a specific redemption goal.

When There’s Nothing Else You Want/Need

Some credit cards will offer alternate rewards, beyond cash redemptions. In some cases, though, the other options won’t be anything that you need or want. When that happens, cash is still the best choice.

You might be able to choose gift cards for certain retailers, or even apply your rewards toward purchases with florists, spas, or travel agencies. However, if none of those options is something that you need – or really wanted anyway – it’s not worth spending your rewards on that kind of redemption. Plus, you can often get a better deal on the same type of purchase by shopping around and just paying with cash.

So, it’s usually smarter to grab the cash and find your own deals on the things you actually need and want.

When You Don’t Plan to Travel

One of the best things about credit card rewards is the ability to save up points and miles for cash. In some cases, you can turn a few hundred dollars’ worth of rewards into airfare, cruises, or hotel stays that would costs thousands.

But what if you don’t plan to use your rewards for travel? In that case, cashing out rewards for a statement credit is the option that makes the most sense. However, keep in mind that redeeming accrued rewards toward travel is almost always the most valuable choice.

Plus, many points-earning cards also offer travel portals for redeeming rewards, where you’ll enjoy discounted pricing and even rewards bonuses. You could easily turn rewards worth $1,000 cash into $1,500 (or more) of travel, just by using the card’s portal.

Be sure to compare your options and their value before opting for cash.

When You Risk Interest Charges

Lastly, there’s one time when redeeming rewards for cash is the smartest idea: when you risk accruing interest charges on your statement balance.

Let’s say you have cash back rewards saved up in your account for a rainy day, but you wind up in a situation where you can’t pay your bill in full one month. Rather than wind up paying interest charges – often at the rate of 20-30% APR – on the balance, go ahead and cash in those earnings for a statement credit.

Even if those rewards could have been worth more toward travel or other redemptions, the difference is unlikely to compensate for high interest charges. If given the choice between saving rewards for a fun, valuable redemption later or avoiding interest on your balance, always choose the latter.

Cash back credit cards are wonderful products and can be incredibly valuable. Choosing to redeem your rewards for cash isn’t always the best choice, though. It’s always imperative to weigh your options and calculate the value of each choice you’re given before clicking “redeem.” Most rewards cards will offer customers the ability to choose how they want to, ahem, cash in their earnings. And cash back (in the form of a check or statement credit) is almost always an option. But when, if ever, should you do it?

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