Accumulating rewards points is a great hobby. Redeeming them for world travel and adventure even more so.
But we are unlikely to travel before 2022, what with a global pandemic and the recent expansion of our family.
As such, I’ve cashed out all of our flexible rewards points… we can earn more later, and the cash out options were enticing.
Cashing Out Rewards Points
As Brandon so eloquently outlined, in normal times there are a plethora of options for converting flexible points to cash.
Due to the global pandemic, credit card companies have implemented extra (possibly temporary) options…
Chase has the Pay Yourself Back feature, which can be used to redeem Ultimate Rewards points against purchases in certain categories. The Sapphire card bonuses apply (+25% for CSP and +50% for CSR.) As we have the Chase Sapphire Reserve card, this gives us 1.5cpp redemptions.
I was able to cash out about 200,000 points for a credit balance of just over $3,000.
Pay Yourself Back redemption credit examples
Uber Eats redemption
Capital One has a similar feature called Cover Your Purchases – points can be used at 1cpp to offset purchases in certain categories (an improvement over the normal 0.7cpp account credit option.)
Both companies currently have dining or food delivery services as redeemable categories. With Chase you can offset each purchase only once, but with Capital One you can redeem a seemingly unlimited number of times. I cashed out over $700 worth of points on just 2 purchases. Since my balance went negative they pushed a check out. (Deposited electronically.)
76,384 Capital One Venture points
We did a similar amount on Winnie’s account, for a total cash out of about $4,500.
Can’t Cash Out Everything
Not all accounts can be cashed out at acceptable rates, so we are keeping a bunch of less flexible points.
Here is a summary of current point hoard:
Alaska Airlines: 119,663 miles (+40,000 after tax season)
Amex: 0
Asia Miles: 1,500
Capital One: 0
Delta Airlines: 9,281
Hilton: 27,051
IHG: 180,916
Marriott/SPG: 140.085
Ultimate Rewards: 0
United Airlines: 47,429
Total value: ~$6,013
The Marriott points will come in handy if Jr and I are able to do a quick spring ski trip (unlikely), and the United miles will probably be used for an upgrade for my Mom when she is able to visit (whenever that is.) A US family visit might happen in 2022, and our IHG points will help there.
The free night certificates with each of these hotel cards we have just been using for some local swimming pool access.
Accumulating
We are also accumulating points – I paid all of our estimated taxes in July with 3 new credit cards (IHG, Alaska, and United, bonuses included in totals above.)
I’ll be paying Q3 estimated taxes with a new Marriott Bonvoy Boundless card for Winnie (100,000 point welcome bonus with $3k min spend in 3 months.) Learn more! (affiliate link)
In October we will hit the 4 year mark on Winnie’s Chase Sapphire bonus eligibility, which will be a good time to close the CSR and apply for a new CSP. This is also the incentive to cash out our UR points now since we will be dropping to a 25% Sapphire bonus.
Summary
It’s not as exciting as $10,000 off world travel or $7,000 round-the-world tickets for $200, but due to reduced travel plans and an uncertain future we cashed out most (all?) of our flexible points.
As much as I would like to get a spring ski trip in, traveling before 2022 is unlikely and that will probably be limited to family visits.
In that light, $4,500 in cash is nicer than having some TBD amount (but probably ~$4,500 worth) of future travel. We can always get more (and we will.)
We’ve been cashing out. I thought that Capital One multi- redemption thing was a bug, not a feature. I should do more cash out…
might be a bug – seize the day
Great article! I’m new to your blog. Can you provide me with a ‘cheat sheet’ for the acronyms used in your post? Thanks in advance!
sorry, I can try… Chase Sapphire Preferred (CSP) and Chase Sapphire Reserve (CSR) are 2 popular rewards credit cards. IHG is the hotel chain that owns Holiday Inn, Intercontinental, etc…
Thank you!
Carolyn – start here if you’re interested in travel rewards! Lots more articles to come on the topic.
You alluded that you pay estimated taxes on your credit card. Are t there heavy fees associated with that?
Not really. Maybe I pay $50 in fees and get $750 in hotel nights for doing so.
Details: Pay taxes with credit cards
Good article as always. Given disruption in travel do you think it’s possible, if airlines pull bankruptcy, to lose all your points with them? I’ve got an awful lot with UA…
It could certainly happen… but I suspect a (massive) devaluation would be more likely. It’s not good for the post-bankruptcy recovery to have pissed off your highest spending customers. Depends on how bad it gets
Highly unlikely UA will go under with no way to redeem miles. I’m keeping a good stash of them!
It took us awhile to mentally adjust to letting go of the travel possibilities, but we’ve recently done the same cash out.
The CSR in particular worked well. It was helpful to see you cashed out 200k+ UR too. It was hard to give up that travel, but ultimately the right decision for 2020.
We went through the stages… denial, grief, etc… Now we’ve accepted it and acted accordingly.
I find this puzzling. Chase isn’t going out of business. You can earn a WAY better return using those points for travel miles down the road. Who cares if it takes a couple of years first? You can afford to wait! Were the points simply “burning a hole in your pocket?” I would understand it if you think airlines are going to inflate away the value of the points….
>You can earn a WAY better return using those points for travel miles down the road.
Maybe. Maybe not. If you see my last few redemptions, I did a lot at 1.5cpp. Same same. It’s easy to earn more points.
If airlines deflate then transfers to those programs also get deflated. Getting more than 1.5cpp on biz class travel may become more difficult as airlines struggle. The deflation of points programs was already an annual occurrence pre-pandemic.
We also are unlikely to travel biz class in the coming couple of years. I’ll just earn more points then.
I’ve been getting 2.8cpp U.S. to Eastern Europe for years. Airlines have no pricing power during this pandemic. If anything, they may have to make points offers even better just to fill seats–though I’m not predicting that. Unless they change the equation, I’m going to hold out. It’s a risk I’m willing to take since I use about 120,000 miles a year just to and from Europe.
Makes sense. I’ll just get another 120,000 for next year is all.
My best redemption ever was about 20cpp (biz class to Paris.) I’ve done 10cpp for flights to HK, but now plan to avoid that airport. Our flights for foreseeable future will be Asia-US and Taiwan-Japan. On google flights those are currently <$500 and <$300, respectively, so no pricing power just means I pay cash because they are so inexpensive.
Keep the faith!
P.P.S. About to sign up for the Marriott Bonvoy by way of your link. Hope you get a little something in your pocket for the tip in this post.
MI – I haven’t cashed out yet either, although my circumstances are different than Jeremy’s (e.g. I didn’t just welcome a new child to the world!). It all depends on what your expected use and return is on the currency. I think I would probably cash in a lot of points as well if I had no plans to do much travel in the next two years.
Thanks MI, the Bonvoy card is fantastic. Enjoy!
That’s the key… I’m mostly just cashing out the points that would have paid for 2020 and 2021 travel. And maybe 2022. I’ll get more points for 2023 travel.
Wow. Thank you so much for this tip. I have been sitting on ~140k of UR points and another ~90k of Venture rewards. Just redeemed them all using the methods discussed above. With no trips in the future and travel redemptions looking pretty weak, this was a great way to maximize value. Thanks again.
That was my thinking as well – make the most of the hand we’ve been dealt.
We’re using the chase pay yourself back feature. Almost exclusively for grocery stores. Something like 80,000 points so far.
I always wonder how these things change my purchasing decisions in ways I don’t want to admit. If I was perfect, it wouldn’t change any decision. But I am not perfect.
We most definitely spend more than we would otherwise – just having credit cards does that, statistically. But we also definitely get more $ benefit by a wide margin
We’ve been similarly cashing out our Chase points off of a Reserve card for the 50% bonus. It’s nice that we can use the points for groceries and takeout during the pandemic, we’re getting close to about $1,000 in redemptions for those food categories (closing in on 60K points or so).
We’ve been using the freed-up funds to invest in the downmarket, donate, and support local business where reasonable. I think that’s probably a better use of the points than we could imagine in a future traveling scenario.
We’ve got plenty of other nonredeemable points (like you) for future travel.
Alas I don’t have the option of paying for groceries with credit card (Taiwan grocery stores only take cash or local cards.)
But restaurants are open and Uber Eats works. I’ve now switched to using my Bonvoy card for restaurants as they currently pay 10x points
Hi Jeremy just curious, when you close your CSR, do you need to wait 2 years before you are eligible to get the CSP/sign-on bonus since they both are in the “sapphire” product family?
It’s a 4-year wait time since you last received a Sapphire bonus, either from CSP or CSR. Since Winnie last got that bonus around Oct 2016 we could close her CSR anytime and then apply for the CSP post-Oct.
I’m curious to know what taxes you are paying with your credit card. Are you no longer following your famous “Never Pay Taxes Again” post? (Keeping taxable income below the standard deduction and keeping long term capital gains in the 0% bracket). Thanks!
I’ve had to pay some self-employment taxes since 2014(?) and last year I did a massive capital gain harvest (100k gain +/-)
Details:
Harvesting Massive Capital Gains
The Go Curry Cracker 2019 Taxes
7 Years of Early Retirement Tax Optimization
Paying taxes with credit card
Say it ain’t so! Haha I can’t bring myself to empty those rewards, though financially it probably does make more sense to put the money to work for you instead of sitting in an unused account for two years! And that’s just for the points that don’t expire…
This is tempting with no travel plans on the horizon and a desire to boost cash savings. But I have the CSP… does it make any sense to cash out at 1.25?
no right answer on this one…
2022? Why such a pessimist view? Domestic travel is normal already and international will be back sooner or I’ll go nuts
He has a growing family, a nice apartment, and access to a pool – I think I would stay put in that situation as well!
Some people will travel before 2022, no doubt. I just don’t plan to be one of them.
Just for fun, I may quibble with use of the word normal.
My Mom just bought a ticket for SFO-MSP for $125. Google flights says that is $245 cheaper than normal.
Some delay to the data, but domestic travel is abnormal: “U.S. airlines carried 80% fewer scheduled service passengers in June 2020 than in June 2019“.
I’ve been spending UR points as fast as possible. But it’s hard…take out once a week…Costco doesn’t count as grocery which is where I do a big monthly shop. I get gas gift cards at the grocery store but don’t drive much anymore.
I guess I can get some Amazon cards, although I don’t spend much there either.
No sure if you’ve heard, PayYouselfBack will continue after September 30th but the categories may be different.
The only bad redemption is the one you don’t make!
This is the best summary, well said
What’s your reasoning on opting for the CSP over getting the CSR again? Not planning on using the extra benefits anytime soon?
Roughly, 60k UR points with CSP and 50k with CSR. If I transfer them out to an airline, 60k is worth more. If I purchase travel through the UR portal, they are worth the same (60k*1.25 = 50k*1.5 = $750.)
We’re holding onto our points right now b/c we hope to do at least some travel in 2021 and don’t need the money right now. Of course, there’s a risk the points will go away or change value, but I’m expecting that the points will get us more travel (when we finally can do it) than cash if we withdraw it, so we’re holding for now. We’ll see!
I YOLO’d my points on a round trip flight to Guatemala for 30 days next March for my wife and I.
Purely impulsive. Now the burden is on me to find hotels with availability. Very difficult since many of them are communal spaces. Might have to do air bnb and hope for the best because I was planning on city hopping and traveling the whole country. I might be stuck to the touristy areas or sneaking in the forest with a tent.
Very interesting perspective. I haven’t cashed out anything since I still believe the points will provide greater value when redeemed for services. Of course, no one can predict the future, so who knows how the points system will change.
I have a lot of points and actually need to travel for 6-7 weeks before the end of the year. Current plan is to “work from home” in Southern Italy.
There are amazing deals right now on flights even going out 12 months and most of the major airlines have very flexible refund policies. You might be able to save a ton booking a trip betting that things get back to somewhat normal.
Do you think with the impact of travel due to the pandemic these points will lose their value over time?
We have 1.3M “points” across all of our accounts that should be worth close to $20,000 (at current valuation). Of course, we won’t be able to get a bit fat check of $20K if we can redeem some of them in cash but we should still be able to get probably half, which would fun a third of our current lifestyle.
Should we cash or should we hold onto them?