As a person who flies in the back of the plane, cash back is starting to be a better option for my travels. There are plenty of travel rewards cards, like the Capital One Venture or Barclay Arrival to offset your travel cost, but non-travel cash back cards can help offset your travel cost too. Since people in this game are always looking to redeem at “max value,” there are ways to redeem your cash back for more value.
Ways to Redeem Cash back for More Value
The Normal Thought:
In most cases, cash back is a boring, straight forward currency. It’s not an exciting currency that will fly your first class across the world. You earn at X rate and redeem for Y, there is very little variability.
Many people will say that with cash back you only redeem at 1 cent per point. While that could be true, I think there are times (deals seem to happen all the time) where you can actually redeem your cash back for a higher value than 1 cent.
American Express Offers:
I am a huge fan (I’m not alone) of Amex Offers. These range in savings, but there always seems to be a solid offer out there. These savings can range from 5% to 20%+. There are even occasional offers where you earn 100% back as a statement credit.
Using you cash back in conjunction with your cash back can increase the value of your redemption.
If you have an offer where you save 20%, this would in turn make your cash back worth 20% more. You would use your cash back to pay your American Express card for the purchase you made after the credit has posted.
For example (I’ll use my USAA Limitless as the example), if I were to book a room at the Hampton in use this offer:
If I were to get the room for $175 (wishful thinking), I would receive my $35 credit and only pay $140.
I would then redeem $140 of my cash back to pay for the charge. Since the USAA Limitless earns at 2.5% rate, and I saved 20%, I redeemed my cash back at a rate of 3%. Not to shabby.
The rate of redemption would vary based on the discount you received from the Amex Offer.
Buying Gift Cards
I am not talking about walking into a store to buy a gift card. There are plenty of site out there that will sell gift cards at a discounted rate.
Some of these gift cards, like Hyatt can be up to 20% off! Sites like Amazon and Ebay seem to always have their “Flash Deals,” which always seem to include Hotels.com for 20% off and occasionally Airbnb/Hyatt.
Buying discount gift cards don’t even need to be travel related. There are plenty for dining, shopping, etc.
Any of these offers can lead to a better redemption than the normal 1 cent. It won’t be a ridiculously high number, but it is still a higher redemption rate. This is a very easy way to increase the value of your cash back.
These discount gift cards even apply to airlines like American Airlines and Delta. Start adding in all the discounts and the savings can really add up.
This is definitely an option I thought about leaving off the list. In most cases, this is a terrible option since you will actually pay more for your flight/hotel.
If you can run the numbers and you come out ahead this could make perfect sense. Many times this could be if the company is having a promotion to reduce the cost or offer extra points.
I had a friend purchase points for a Hyatt stay instead of paying for for room and this saved him about $200. Will buying points always lead to a discount? No, it won’t but it is still an option that could increase the value of your cash back.
The potential increase of value will depend on the cost savings of buying points vs paying for the room. In many cases, buying points will not lead to saving money, but you should always run the numbers.
I am a big fan of Discover. This is probably due to their great customer service and ease of earning 5% on rotating categories. Utilizing Discover Cash can be an easy way to redeem you cash back for more.
If you were to look at all the gift cards they offer, you an redeem anywhere from 11% to 100% more in value from your Discover Cash. Some of the ones that offer some great value (100% more in value) are cruises and rental cars.
Take into account that if you are in your first year with Discover they will double all the cash back you earn, this really makes Discover Cash an undervalued currency.
This comes around every year and could provide better value for your cash back. There are many items on the list that sold at a discount, like those Avis Car Rentals (where Charlie got 7 of them!). Those can easily save you lots of money on travel you were planning on taking.
If you plan to stay at Marriott, trying to buy the gift card offering for 20% off is a great way to increase the value of your cash back redemption. Those Hyatt packages are typically sold out in seconds, because you are buying points for about 1 cent per point.
You definitely need to do the math to see if it makes sense for you, but purchasing these packages at a discount increases the redemption of your cash back.
The thought of cash back being a fixed 1 cent redemption isn’t necessarily true anymore. There are many ways to increase the redemption value of your cash back, as long as you are willing to do a little research.
Are you going to redeem your cash back for 12 cents per point? No, you probably won’t. I also don’t live by the idea of maximizing every last drop out of my points.
For someone who flies coach and doesn’t worry about status, this is probably something you should consider trying.