When is it Best to Use Capital One Points?

No matter your current credit score, or which card you hold, Capital One offers a robust line-up of 19 credit cards, each of which yield rewards for the cardholder when they spend. Getting cash back or miles for an airline ticket feels good, but it begs the question as to how to optimize the savings that you get. The right timing and method of redemption are very dependent on how Capital One is rewarding you, and how you intend to use those rewards in the future, but there are certain things that cardholders should be on the lookout for, to ensure that they are not needlessly spending their points.

Redeeming Points as Cash Back or Statement Credit

When: ASAP

If you are hoping to take the added value that you receive from cash back rewards and use it specifically as cash within your savings or checking account, it would be best to redeem that money as soon as you possibly can. For one thing, that cash back sitting on your credit card account is not earning interest, which is an interest that it could otherwise be generating in another account. Furthermore, if you are hoping to pay down debt with your rewards, you will also save as much money as possible by redeeming it in the short-term. That way, your current balance will not be generating high amounts of interest against you, thus affecting your credit or spending in the long-term.

Furthermore, if you are hoping to get cash back or a statement credit, you should only do so with cash back rewards. Redeeming airline miles for cash back or a statement credit yields half of the points’ original value, which is to say, it takes a hearty chunk out of your wallet. Though it seems kind of arduous, it would be best to redeem these miles in the form of a gift card, they are less liquid than cash, but still useful in nearly all retail environments.

Redeeming Points as a Gift Card

When: When travel is not an option; when you need a gift

As I already discussed, one can translate their airline miles to become value on a Capital One gift card, with essentially the same amount of proportional value as they would give as airline miles (1 mile = 1 cent in airline miles terms, and when translated to a gift card, 1 point on the gift card = ~0.8-1 cents). This is great if you are someone that has earned airline miles and have no intention or need to use them in the near- to intermediate-term. Also, though this is a very specific application, gift cards like these would make a great gift for a co-worker or distant relative.

Redeeming Points Directly with a Retailer

When: If you prefer convenience to save

Recently, Capital One has made a deal with Amazon where, if you have a Capital One card hooked up to your account, you can redeem your points for the proportional amount of cash directly in your cart. Since the amount of value of the points being redeemed is directly proportional to their base value, this is not an instance where customers should necessarily be wary of being taken advantage of, but this can really only benefit those who shop on Amazon quite often. Otherwise, as I already discussed, converting those cash back rewards into actual cash for your checking account is much more efficient and can generate additional revenue. Thus, relying on this strategy is ultimately prioritizing convenience, and your own time, over the soundest money management.

Redeeming Points as Airline Miles

When: If you cannot find a good deal with an airline

Finally, there is the ever-popular way of redeeming reward points for airline tickets. However, this should not necessarily be your go-to strategy. If you are looking for a way to fly away on vacation, you should first look to find the strongest possible deals to save money, and not use airline miles as a crutch to find the first possible ticket. Then, once you find this deal, you should be thinking about the trade-off between reducing and growing your miles - do you desperately need to use those miles to afford the trip, or can you use the trip to continue racking up points on your card, for another time? Having a savings of airline miles can come in handy in case of emergency, so they should not be used all too freely. 

Also, a word of caution about translating your miles to another airline’s loyalty program. For some airlines, like Air Canada, you can transfer your miles at an increase in value (every mile with Capital One is worth 1.125 miles with Air Canada). However, there are other airlines, like Finnair or JetBlue, where those miles decrease in value. Thus, if you are looking to transfer your airline miles, be sure to check the conversion rate at Capital One’s website.