When Should You Cash Out Credit Card Points

When Should You Cash Out Credit Card Points

Why Would You Want to Cash Out Points

If you’ve been following along, you know that there’s a ton of great redemptions you can make with points. So now you may be asking yourself, “Why would I ever want to cash out my points???” and that’s a totally valid question. The answer to that is simply that points are a depreciating asset. Devaluations can happen at any time and without notice. Look at how United and Alaska both recently devalued their partner awards without any formal announcement.

Japan Airlines first class used to only cost 70,000 Alaska miles one way before the devaluation.
JAL First Class For 70k Alaska Miles Pre-Devaluation
Japan Airlines first class now costs 100,000 Alaska miles one way after the devaluation
JAL First Class Now Costs 100k Alaska Miles Post-Devaluation

While it may be cool to say that you have 1 million points, the reality is that those points have 0 value until they’re actually spent. Instead, it would be better to cash out those dormant points and put the extra cash towards investments or purchases that will bring you more value. This is why the motto is always “earn and burn” even if you have to make a sub optimal redemption or cash out those points. Let’s get into some scenarios where it makes sense to cash out your points.

Your Accrual Rate Greatly Exceeds Your Spend Rate

If you’re simply earning points faster than you can spend and have no immediate plans to use the points, it could make sense to begin cashing out points. For example, let’s say that you really only take 1 big vacation per year that would cost you 200,000 points. If you’re smart with your credit card strategy, you can easily earn 300,000 points a year through credit card churning.

At this current rate, you would be earning more points than you’re spending and will eventually reach a point where you’ll have more points than you know what to do with. In this case, it’s probably worthwhile for you to cash out those unused points and add have a little extra income.

Consider cashing out if your point accural rate is too high

You Have A Ton of Points

This could apply to folks who have held point earning credit cards for years but never really got into the award travel game and therefore never spent their points. I often see people asking “I have a couple million points and don’t know what to use them on. Help!”

The obvious solution is to transfer those points to me.. just kidding. But in all seriousness, the best and also the quickest way to use those points would be to book luxury flights and hotels. But if that doesn’t appeal to you or you really have too many points to know what to do with, it makes sense to cash out and put that extra money to use elsewhere.

Cash out if you have more points than you know what to do with

You Aren’t Traveling Much

As mentioned above, the beauty of these credit card points is being able to use them for memorable travel experiences. However, there may be times when you’re simply unable to travel and would be better off just cashing out these points.

Covid was a good example of when it made sense to cash out due to lack of travel. No one really knew when Covid would end and when the travel industry would return to its normal self. So instead of just sitting on a stockpile of points and potentially coming across award program devaluations, those points could’ve been cashed out and put into the stock market to ride the great bull run we saw during that time.

You Need The Cash

Life happens. If you suddenly find yourself in a situation where you have other financial priorities or are in need of immediate cash, it makes sense to cash out. There will be future opportunities to travel in luxury and in this hobby, you can always build back up your point fortune. It’s never a bad option to cash out if there are imminent needs.

Have your priorities straight and don’t get so tied up with the idea of only making perfect, optimal redemptions. It’s important to remember that points are here to help you, not restrict you.

Unexpected bills could be a good time to cash out

How Many Points Should You Cash Out

So if you find yourself falling into any of these categories, the logical next question then is “How much do I cash out?” In general, I think it’s wise to always set aside enough points for emergency travel or a single potential award redemption. You can almost think of it as a points emergency fund. If some really great transfer bonus or critical situation requiring you to travel comes along, you’re going to be thankful that you had these points ready to go.

Setting this excess point threshold and cashing out any extra points that exceed it is a smart way of managing your points. It allows you to still be flexible in your travel plans without missing out on potential gains elsewhere.

Keep enough points to spend when lucrative transfer bonuses come around


Credit card points are an invaluable asset but there are still times when it makes sense to cash them out. If you find yourself with a lot of points and don’t have a long term strategy on how to use them, it’s probably wise to cash out. Let me know if there’s been times when you cashed out your points and why!

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