Should You Be Using Reward Points To Pay Your Bill? (2024)

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A recent survey from Empower found that 29% of Americans are cashing in rewards points every month as a form of payment to cover their bills. The survey also revealed that 26% of consumers use digital payments weekly.

With payment methods changing and consumers racking up more rewards points through strategic shopping, it shouldn’t be surprising that these points are being used to handle expenses. However, using rewards to pay bills may not always make sense.

GOBankingRates reached out to the experts for their insights on how to best maximize the value of your reward points.

Better Ways To Use Your Rewards

While using your reward points to cover your bills can be tempting, it isn’t always the best option for your finances. There are a couple of a reasons for this.

Use Rewards For Travel

“Rewards points often provide better value when used for travel rather than bill payments,” said Phillip Parker, the founder of CardPaymentOptions.com. “This is because card issuers often have partnerships with airlines and hotels that incentivize point spending on travel purchases.”

Many reward points from credit cards are optimized for travel and travel-related spending, so converting the points to cash may not give you the best bang for your buck. You’ll want to explore the database offered by your credit card provider to see what kind of purchases your points could get you if you choose to redeem them for travel.

Maximize Your Savings

Loyalty and rewards expert at Valuedynamx, Kelli Hobbs recommended combining your rewards with other promotions from your bank.

“By combining cashback or rewards points with other incentives, such as affiliate offers or promotional deals, you can amplify your savings,” said Hobbs. “This stacking approach allows you to get more value out of your rewards, effectively stretching your dollars further.”

If you have a trip or any major expense coming up in the near future, you may want to save your points to ensure that you get the most value from them. You could also combine your points with a promotional deal to get a better price on that appliance or on other expenses that you have.

If you take some time to run the calculations, you may find that you’re technically losing out on money by taking the cash to cover bills instead of using points in other areas.

When To Use Points To Pay Your Bill

While using reward points to pay your bills isn’t always best way to get the most bang for your buck, there are times when you’ll want to do exactly that.

If You’re Struggling Financially

Hobbs noted that if immediate financial relief is your priority, using rewards to pay bills makes sense. There isn’t a one-size-fits-all solution to most financial matters, and this isn’t an exception.

If you need to use the cashback to help with bills, do it. It’s more important to stay on top of your monthly expenses.

If You Need the Funds for Other Expenses

“For those with tighter budgets, which is especially common in the holidays, applying points to cover essential expenses might be a practical way to stay stretch out your wallet,” explained Hobbs.

Inflation continues to push costs higher, so it’s no surprise that more people are looking for ways to add to their shopping funds. With the holiday season quickly approaching, you may want to cash in on any rewards you have to pad your holiday budget.

Parker added, “The reasons someone would want you to use points for paying bills may outweigh the better redemption value they’d get with travel.”

If using your rewards points to pay your bills keeps cash in your pocket when you need it most, that is the best use of your points.