Unlocking the Cash Value of Your Credit Card Rewards

Credit card rewards points have become a popular way for consumers to earn valuable perks like cash back and free travel. But did you know you can unlock even more value from your points by converting them into cash? Companies like PointsPay allow you to cash out your credit card rewards for real money.

How Cash Back Rewards Cards Work

Let's first understand how cash back credit cards work. These cards give you a percentage return on spending - often 1-5% back - either as a statement credit or reward points. For example:

· Spend $1,000 on a 2% cash back card = Earn $20 cash back

· Spend $5,000 on a card earning 1 point/$ = Earn 5,000 points

On the surface, a $50 cash statement credit seems simpler than 5,000 points. But these reward points can be redeemed for the same $50 of value or more if transferred to airline and hotel partners. This flexibility provides opportunities to increase the value of your points if managed properly.

Airline and Hotel Co-Branded Credit Cards

In addition to cash back, issuers offer popular airline and hotel co-branded cards like the Platinum Delta SkyMiles® Credit Card from American Express and Hilton HonorsTM Surpass® Card. These cards earn points that can be redeemed for award flights and hotel nights with the partner brand.

The value of airline and hotel points depends on how they are used - ranging from 0.5 cents to 5+ cents per point based on factors like:

• Award flight rates (saver versus peak)
• Hotel award prices (standard room or overwater bungalow?)
• Transfer partner combinations
• Purchasing miles directly versus through credit cards

Because the value depends greatly on redemption options, these co-branded points hold less inherent value than cash back or flexible rewards points (more below). But lucrative redemptions still exist by leveraging transfer partners and sweet spots.

Flexible Travel Rewards Programs

The most valuable credit card rewards come in the form of flexible, transferable points. Programs like:

• Chase Ultimate Rewards®
• American Express Membership Rewards
• Citi ThankYou® Points
• Capital One Miles

These let you transfer points between multiple airline and hotel partners. This unlocks greater value through combinations like:

• Transfer Amex MR → British Airways → Book American Airlines flight at reduced rates
• Transfer Chase UR → Hyatt → Book luxury hotels for lower point rates

Finding the best transfer partner and redemption for a specific flight or hotel stay allows you to stretch your flexible points much further. Programs also offer cash-equivalent redemptions, statement credits, online shopping portals, and more to maximize value.

Cash Out Credit Card Rewards

Now that we've gone over how major credit card rewards programs work, let's discuss why you may want to cash out those hard-earned points for cold hard cash.

There are two primary reasons consumers convert points into cash instead of traditional travel redemptions:

• Immediate liquidity - Cash in your account can be spent anywhere. Cash redemptions also avoid planning complex award travel.jio
• Avoid point devaluation - Earned points rarely gain value over time. Transferable currencies can actually increase in value occasionally. But more often loyalty programs make negative award chart changes over time that significantly reduce point values. Cashing out locks in a fixed value before future devaluations occur.

Cash out options include:

1. Statement credits - Some points can be redeemed for statement credits (often at a lower rate, like 0.5 to 0.8 cents per point).
2. Deposits - Certain loyalty programs will directly deposit cash into a bank account connected to the rewards account.
3. Gift cards - Points can be exchanged for gift cards for a variety of retailers and turned into everyday spend.
4. Third-party buyers - Companies like PointsPay will buy your credit card points at competitive rates via PayPal or direct deposit. More on this below.

The best cashout value typically comes from directly transferring points to frequent traveler programs before the final cash redemption.

How Third-Party Buyers Work

Instead of redeeming credit card points through the loyalty programs, you can sell your points to third-party buyers like PointsPay. Here's how it works:

1. Request a quote by picking your program (Amex MR, Chase UR, etc) and specifying how many points you want to sell.

2. They provide an instant cash price for your points based on current market rates. Rates vary between ~0.5 cents to upwards of 1 cent per point depending on market conditions.

3. After agreeing to the rate, you verify that you own the account by providing some personal details.

4. Once verified, you get paid via direct deposit, PayPal, etc. Payment clears before points are deducted.

5. The company securely transfers the points out of your account to complete the purchase.

This allows you to easily unlock cash value from credit card points that would otherwise sit unused. Cashout companies provide an important liquidity option for consumers.

When Does It Make Sense to Cash Out Rewards?

Here are some of the best times to consider cashing out your credit card points instead of redeeming for travel:

1. You have no immediate travel plans for using points
2. You need cash to pay bills or other financial obligations
3. Your points are at risk of expiring soon
4. You have accumulated points from credit card bonuses
5. Your loyalty program has recently devalued award charts
6. You have orphaned points from a shutdown credit card
7. You can cash out at high rates from temporary promotions
8. The value of cash exceeds your typical point redemptions

                                                            Credit Card Rewards

Even if you don't need cash immediately, it can make sense to cash out a portion of your points portfolio over time as a form of balance diversification. This reduces risks associated with loyalty programs eventually folding or massively devaluing points.

Here are times it likely makes more sense to keep your points instead of cashing out:

1. You have an upcoming trip to redeem points on
2. You frequently redeem points for high value awards
3. Your credit card points are continuing to accumulate
4. No urgent financial need for extra cash
5. Loyalty programs have not made major recent devaluations
6. You value transfer options more than cash redemptions

As always, do the math on your specific redemption options. If 1 cent per point cash out value exceeds your typical award redemption, cashing out wins.

Pros of Cashing Out Credit Card Points

Here are the major benefits of converting rewards points into cash instead of traditional award travel:

• Immediate payout – Receive cash via PayPal or direct deposit within days instead of planning complex point vacations
• Flexible spending – Cash has infinite uses compared to narrow travel redemptions
• Beat devaluations – Points rarely gain value over time. Cash out now before airs/hotels devalue more.
• Simple process – Easy online quotes and account verification to receive payment
• Extra income – $100 here or $500 there provides nice side income to reinvest
• Avoid expirations - Never let hard-earned points vanish again by cashing out
• Liquidate orphans - Cash out leftover points from shutdown cards that have limited utility
• Diversify assets - Reduce risks of loyalty programs folding or mass devaluing points

Cons of Cashing Out Credit Card Points

Of course, there are some disadvantages to consider before locking in points for cash:

• Lose upside potential – Occasionally points gain value when transferred to partners
• Forego future redemptions – Cashing out now loses option value of points for future award bookings
• Pay transaction fees – Some programs levy a small fee for cash redemptions
• Impact elite status – Cashouts can reduce your standing in loyalty programs
• Tax headaches - Cashouts from credit card points may count as taxable income
• Lower value – Cashout rates, although often favorable, are less than the highest redemption values

For most casual travelers holding idle points, the pros tend to outweigh the cons. Just make sure to compare cashout values against your typical redemption values before exchanging your points.

Alternatives to Cashing Out Completely

If you want to unlock value from your points but are hesitant to sell all of them outright, there are some alternatives to consider:

• Redeem for flexible points – Transferring Chase UR and Amex MR to airline/hotel partners preserves options before cashing out
• Exchange for gift cards – Swap points for Amazon or other gift cards to cash out chunks at a time
• Fund retirement accounts – Some programs let you deposit cash rewards into IRAs or 401ks
• Donate to charity – Tax write-offs on donated miles can outweigh cash redemptions
• Cover purchases – Use points for purchases you’d otherwise make in cash (hotel stays, electronics, etc)
• Pay bills – Certain programs issue cash equivalents to pay utilities, loans, or other bills

Finding a Reputable Cashout Points Company

The credit card points market has its fair share of shady cashout companies you’ll want to steer clear of. Here are some tips for safely cashing out your rewards:

• Check reputation – Thoroughly research reviews and complaints made against the company.
• Compare rates – Get quotes from multiple buyers to find the best payout for your points.
• Review terms – Read all terms and conditions before agreeing to cash out. Watch for red flags.
• Verify security – Only provide info and login credentials via secured web pages.
• Check licensing – Ensure the company is properly registered and licensed to operate.
• BBB rating – Confirm an excellent Better Business Bureau rating with resolved complaints.

The best credit card points cashout companies make it easy to safely unlock real value from your idle rewards balances. Just do your due diligence before trusting anyone with your loyalty account details.

Is Cashing Out Credit Card Points Worth It?

At the end of the day, whether cashing out makes sense depends on your personal point valuations and needs. But it can certainly be worth it in many circumstances.

Even at conservative valuations of 0.5 to 1 cent per point, cashouts provide an excellent return on credit card rewards.

• 250,000 Amex points cashed out at 0.7 cpp = $1,750
• 180,000 Chase points at 0.9 cpp = $1,620

That's a nice chunk of change for points potentially at risk of expiring or losing value!

Offloading a portion of your points into cash also helps diversify your rewards portfolio and hedge against loyalty program risk.

Consider your options, do the math for your situation, and never let valuable points vanish again. Cashing out through a secure company means unlocking financial value from your credit card rewards.