Can I Pay My Credit Card Bill With Reward Points?

Credit card reward points offer cardholders a way to gain value from their everyday spending. As individuals accumulate these rewards, a common question arises regarding their utility, particularly whether they can be used to directly pay down an outstanding credit card balance.

Paying Your Bill with Reward Points

It is often possible to use your accumulated credit card reward points to help manage your credit card bill. This process typically occurs through what is known as a “statement credit” or a “cash back redemption.” A statement credit functions as a reduction in the total outstanding balance on your credit card account.

It is important to understand that a statement credit does not count as a direct payment towards your minimum payment due. For instance, if your minimum payment is $50 and you receive a $25 statement credit, you are still responsible for making the full $50 minimum payment by the due date. Failing to make the minimum payment can result in late fees and negatively impact your credit standing.

Not all reward programs offer the option to redeem points for a statement credit, as availability varies significantly by card issuer and the specific credit card product. Some issuers may label this redemption simply as “cash back” that is applied to your statement.

How to Redeem Points for a Statement Credit

Redeeming your reward points for a statement credit typically involves a straightforward process through your credit card issuer’s online platform. Cardholders begin by logging into their credit card account online or via the mobile application. Once logged in, you will navigate to the dedicated rewards or redemption section.

This area presents various redemption options, among which “statement credit” or “cash back” can be selected. After choosing the statement credit option, you will be prompted to specify the amount of points you wish to redeem, or the corresponding dollar value. Some programs may have a minimum redemption threshold, such as 2,500 points for a $25 credit, though many major issuers like Capital One, Chase, Citi, and Discover may offer no minimum for certain cash back or statement credit redemptions.

Once the redemption is confirmed, the credit will typically appear on your account within two to three business days. However, depending on the issuer and the specific offer, it might take anywhere from one to two billing cycles or even up to 90 days for the credit to fully process and reflect on your statement.

Value and Alternatives to Paying Your Bill

While using reward points for a statement credit offers a convenient way to reduce your credit card balance, it often provides a lower value per point compared to other redemption methods. For many reward programs, redeeming points for a statement credit yields a value of approximately one cent per point. This means 10,000 points would equate to a $100 statement credit. However, some card issuers may offer even less, with point values sometimes falling to 0.6 or 0.7 cents when redeemed this way.

In contrast, other redemption options frequently offer a more favorable return on your points. For instance, redeeming points for travel through the issuer’s portal or by transferring them to airline and hotel loyalty partners can often yield a value of 1.5 cents, 2 cents, or even more per point. This higher valuation for travel rewards means that the same 10,000 points could be worth $150 or $200, or potentially more, when applied towards flights or hotel stays.

Other alternatives that can sometimes offer better value include gift cards or merchandise, though their value can also vary. Considering these differences in point valuation can help you make an informed decision about the most financially beneficial use of your credit card rewards.