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The Most Rewarding Uses Of Rewards Points

When it comes to credit card reward programs, there is no shortage of advice on how to pick the best card.

A quick internet search will point you to dozens of articles at the likes of Nerdwallet, The Points Guy, Business Insider and many more, all ready to weigh in on the best rewards program for travel, cash back and a variety of other specific incentives. (I even commented a few years ago in this space about how to choose a travel rewards card.)

Credit card customers might think that doing their homework before choosing a card is the best way to ensure they secure the maximum value. But a recent experiment with my American Express Optima card illustrates why getting the most out of your card’s rewards requires some legwork even after the card is in your wallet.

While American Express’ traditional offerings are actually charge cards – the total balance is due in full each month – Optima was the company’s foray into credit cards. American Express still offers credit cards today, but the company hasn’t accepted new applications for Optima since 2009. Some existing heavy users like me have been grandfathered into keeping it, though most former Optima cardholders have been transferred to other AmEx options.

Part of the reason I am such a heavy Optima user is the card’s excellent rewards. While my daughters were in college, I often used these points to take care of their flights and other personal travel. But now that both are established in their post-college careers and traveling less frequently, I’ve found that my points are piling up.

I wondered whether it would make sense to start using the points for something other than travel. The card allows me to use points to shop on Amazon, where I can buy all sorts of useful stuff, but I hesitated. Were my points more valuable when used to book plane tickets or hotel rooms? I decided to find out.

Step one was to reach out to Ashley Drayer, an administrative associate at my firm. I told Ashley that each of my card’s points is worth 0.7 cents on Amazon and asked her to see if we could get the information necessary to work out a similar dollar value for points used on travel, especially on JetBlue flights or Marriott hotel rooms. I want my points to save me as much money as possible. As long as I’m spending the points on something I need or want, it doesn’t really matter to me whether they go for a flight, a hotel room or a lot of dishwasher detergent.

Some of American Express’ cards allow users to convert AmEx points into frequent flyer or rewards points with particular travel brands. This option is not, however, available for Optima cardholders. (I was not terribly disappointed to get this news; as dedicated travelers have noticed, frequent flyer miles and hotel points are often hard to cash in these days, and their value per point can vary depending on availability.) With Optima, my options are to use AmEx’s own travel booking system, which charges the listed price to my card and then issues an offsetting credit by redeeming the appropriate number of AmEx points, or to request gift cards from Delta, Hilton or Marriot (but not JetBlue).

The gift card method is fairly straightforward. One thousand points would buy me $7 in gift card value for any of the available travel companies. I would receive the gift cards within about seven business days, and I could request them in denominations of $50, $100, $250 or $500.

Booking through American Express Travel was slightly different. For a particular itinerary I suggested to Ashley, she calculated that my existing points would cover a little more than $2,200 in value by comparing the dollar cost with the amount of rewards points I would redeem to offset the purchases of flights and hotel rooms. With some research and some simple arithmetic, we could see that American Express valued each point at 0.5 cents in this context.

I can also use my points directly with the card company to pay some or all of my Amex bill. Used this way, I’ll get credit for 0.6 cents for each point I redeem. That’s a better deal than buying travel through Amex, but not as good as what I can get for redemptions on Amazon or to buy travel gift cards.

All of this legwork left me with the information I needed to spend my points wisely. I had previously refrained from using American Express points on Amazon, because I’d suspected they would go further for travel purchases. It turned out I was wrong.

In the end, there was one more factor that Ashley could not have known about when helping me with my research. When I recently placed my first Amazon order using points, the online retailer happened to be running a special offer of 20 percent off when paying with American Express points. Effectively, for this order, my points were worth 0.84 cents each, rather than 0.7 cents. At that price, I bought a couple of extra boxes of Cheerios.

You don’t need to be a financial professional to work out how to maximize your credit card’s rewards, but in many cases you may need to do a little digging in order to accurately compare different reward types. It’s a lot of homework, and it gets even more complex when you compare the differences between different sorts of cards. But that effort will let you maximize your points’ value – which may let you fly a few miles farther on your credit card company’s dime.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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