Is it a Good Idea to Save Reward Points?

Should I save or should I spend my reward points? It is a question that many people ask themselves as they start to watch their points rise and find great ways to use them. The best advice for your reward points is probably the opposite of what you have heard in the past: spend your reward points now so they do not lose their value. You can save them and hope that they retain their value, but you are likely to get more for your money if you spend them sooner.

Do The Math

The first thing you need to do is look at how your points operate. Before you spend anything  — whether it is on experiences, tickets, or gift cards — calculate the exchange rate to see if you are actually getting a good deal. If you are buying a material good, it is easy to determine if you are going to get a good value versus paying for it with cash.

For example, something worth 250,000 points is likely to be a better deal than something worth 2,500 points. That’s because most people do not earn enough or save enough points.

When to Save

If you are close to reaching a big milestone like 250,000, it could pay to save your rewards points. There are specific programs that offer bonus points, like getting new members to sign up, which could help you grab those extra points.

When to Spend

Many credit card companies will run promotions when it actually pays to use the points in small amounts. They give you a lot more for less points, which can allow you to stockpile things like gift cards, smaller items, and things you would not normally spend with real money.

Remember that you also have to think about taxes when you redeem your points. If you earned points normally, through time and purchases, you will not have to worry. However, if you earned quite a bit of points in exchange for things like opening an account or recommending it to a friend, this may be considered taxable income and you will have to fill out a 1099 form.

If you have earned miles and reward points, instead of saving them you could redeem them for cold hard cash. For more information on how you can easily sell your points with The Miles Broker, click here.