Do Not Use Credit Card Points For Merchandise Rewards

by Jason Steele on November 18, 2012

Using a reward credit card as a method of payment can be a very easy way to receive valuable returns on spending. And while several merchants offer co-branded reward cards that return hotel points or frequent flier miles, points in bank operated loyalty programs have increased in popularity. With these programs, cardholders can choose from several different award options including statement credits, merchandise, and transfers to airline miles. Yet a close analysis of these programs reveal that merchandise awards often yield the least value.


The Ultimate Rewards program from Chase is a feature of many of their products including Freedom, Sapphire, Sapphire Preferred, and Ink for Business cards. Like many programs, Ultimate Rewards allows customers to redeem points for statement credits at a rate of one cent per point, or choose from merchandise options. One option is the Apple iPod touch 32GB MP3 Player, which is available for 25,500 points. When selecting this option, cardholders would forgo a statement credit of $255.00 in order to purchase this player which sells at Target and Best Buy for $249.00.  And while cardholders would seem to be receiving less than one cent per point in value, they are actually doing worse. Cardholders could simply purchase the product through Chase’s Ultimate Rewards mall and receive bonus points for their spending.

With American Express Membership Rewards, the value equation is even worse. Their 16GB Apple iPad 2 with Wi-Fi requires 69,600 points, the equivalent of $696 in cash back. Yet this product currently sells for $399 at Best Buy stores. Therefore, cardholders are only receiving .57 cents in value for their points.

Travel Point Redemptions

When redeeming either Ultimate Rewards points or Membership Rewards points for hotel points or airline miles, savvy cardholders can realize far more than one cent in value per point spent. For example, Ultimate Rewards points can be transferred to British Airways Avios points. When used for flights on their partner, American Airlines, award seats can be found for as little as 9,000 points round trip for flights under 650 miles. Clearly, a round-trip flight from Atlanta to Chicago will cost far more than $90, especially at the last minute. In another example, Membership Rewards points can be transferred to one of a dozen different airlines where 100,000 points is usually required for a business class ticket to Europe. Since these tickets can easily be worth $5,000 or more, cardholders can see more than five cents in value for each of their points redeemed.

By carefully calculating the value of merchandise rewards, and comparing them to the value of point transfers and statement credits, cardholders will realize that merchandise redemptions rarely represent the best use of their reward points. is an independent, advertising-supported comparison service. receives compensation from the credit card issuers whose credit card offers appear on the website. The compensation may impact the order in which they appear within listing categories. does not include the entire universe of available credit or financial offers. Our editors rate credit cards objectively based on the features the credit card offers consumers, the fees and interest rates, and how a credit card compares with other cards in its category. The Editor's Picks credit cards are the expert opinion of our editors, and not influenced by any remuneration this site receives from card issuers.
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