Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

When Should You Redeem Cash Back? | Credit Cards

Some of the links on this site contain offers from our partners.

When you’ve earned cash back from your rewards credit card, you have two choices: Redeem it or let it ride.

What you elect to do will depend on your credit card and how you want to use it. Yet experts agree that redeeming your cash rewards sooner rather than later is a smart idea.

Do Cash Rewards Expire?

If you’re thinking of redeeming your credit card cash rewards, first gather a little information about your account. Namely, you need to find out whether your cash back will expire.

You could lose the cash rewards you earn from a credit card, although it is unusual. The Wells Fargo Rewards Card, for instance, sets a 60-month expiration date on points earned. Points can be redeemed for cash, travel, merchandise, gift cards and more.

If you know that you won’t track your cash back earnings or remember to request cash back at regular intervals, check if you can set up automatic redemptions. If your card doesn’t let you do that, you may want to find one that does.

When you earn a certain amount of cash back, some card issuers will automatically give you a statement credit. Other issuers will allow you to schedule cash transfers to your bank account or send a check when your rewards reach a certain threshold.

But even if you are diligent about redeeming your cash back rewards, you will need to watch out for one more way that you could lose them. If you do not follow the terms and conditions of your credit card, you could lose your cash back rewards.

That means if your account goes into default or you cancel it, you could lose your cash back.

Can You Redeem Cash Back in Any Amount, Anytime?

You may not be able to redeem your cash back rewards until you earn a certain amount, depending on the card issuer. On the other hand, some credit cards let you redeem cash back, such as statement credits or bank deposits, in any amount. Automatic deposits, checks or gift cards may have a $25 minimum.

If your card has no minimum redemption amount for cash rewards – or expiration date for them – you have some flexibility. Still, act quickly.

When you make wise choices, those cash rewards can work in your favor in a few ways. One option: You could withdraw your cash and sock it away in an interest-bearing savings account or invest your money until you’re ready to spend it.

Another smart move is using cash rewards to pay off debt. If you need to pay down your credit card balance, redeem and apply cash back as soon as possible to head off interest.

Are Points More Valuable Than Cash Back?

The answer depends on the rewards program. Sometimes points will redeem at a higher value than cash back rewards. That’s often for travel but can apply to gift cards and other choices.

Your card issuer may let you swap cash rewards for point or miles. In that case, you might want to let your cash rewards accrue until you have enough to meet a goal, such as getting an airline ticket.

You might also be able to transfer your points to an airline or hotel rewards program, which might redeem them at a higher rate.

“It’s possible to get a business class (international) flight that would normally cost $4,000 to $5,000, sometimes for as little as 50,000 to 60,000 points,” says Erik Paquet, director of marketing at AwardWallet, a rewards management service. “If you were just redeeming those (rewards) at 1% cash back, 60,000 points would be worth $600.”

When Is the Best Time to Redeem Cash Back?

Choosing whether to redeem your cash rewards right away or save them toward a specific goal often comes down to personal preference. Do you plan to travel soon, or could you use the cash to pay down debt?

If you decide to save your cash rewards, you must monitor your account. Keep track of rewards and cash back balances on cards, along with any expiration dates.

Finally, know that cash back card benefits and credit card needs can change over time. Check credit card offers from time to time to make sure you’re not missing out on something better.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

Articles: 968