Should You Cash In Your Travel Rewards Now?

Think twice before you unload your travel rewards as quickly as you can.

The novel coronavirus crisis has taken many of us into uncharted waters, and that's certainly true for travel rewards enthusiasts. It's risky to book any trips right now because the immediate future of travel is so uncertain. If you're sitting on stashes of points and miles, you may be wondering what to do with them.

You might want to use your rewards to snap up some travel deals so you don't leave them sitting around. Or maybe you're even thinking of redeeming your travel points for cash. Here's what you need to know to ensure you don't waste those hard-earned rewards.

The best approach is to be patient

It's normally smart to use your travel rewards instead of saving them for later, but this isn't a normal situation. There are lockdowns and quarantines all over the world. Unnecessary travel isn't recommended, because it puts you at risk of both contracting COVID-19 and spreading it to others.

This situation isn't going to last forever, but it's impossible to know when travel will be safe again. With that kind of uncertainty, the best thing you can do is wait it out and save your travel rewards.

If you book travel now, it's possible that you either won't be able to go or will be putting yourself in harm's way. Those risks are obviously lower for travel booked farther in advance -- it's more likely you can take a reasonably safe trip in nine months than in two. But nothing's guaranteed.

Will my travel rewards expire if I don't use them?

One reason you may not want to wait around is the possibility that your travel rewards could expire.

This will depend on the type of travel rewards you have. The rewards in most credit card rewards programs won't expire as long as you have an active credit card in the program. There are expiration dates on rewards with airline and hotel programs, but once again, you can often avoid this if you have a credit card with the airline or hotel.

Review the program expiration policies to find out whether your rewards could expire. Don't forget to see if the program has extended the expiration dates due to COVID-19, because several of them have. Even if that's not the case, there are probably ways to prevent your miles and points from expiring.

Check change/cancellation policies before booking travel

If you have rewards that you need to redeem to keep them from expiring or you'd just like to book travel now, you should review the change/cancellation policies for any travel providers you're going to use.

It's possible that COVID-19 will affect your travel plans, so it's important to choose travel providers that offer free changes or cancellations. Fortunately, many providers have gotten rid of their typical fees for travel booked during the pandemic.

While it's better to wait, if you're going to book now, it's a good idea to use your travel rewards. You'll save your cash, which is always smart when the economy is doing poorly. And should you need to cancel, it's better to cancel an award booking and get your points back. If you cancel after paying in cash, you'll typically get a voucher, and it won't be easy to get your money refunded.

Avoid using travel rewards for cash

The golden rule with travel rewards credit cards to redeem your rewards for travel, not cash, and that hasn't changed.

There are only certain types of travel rewards that you can redeem for cash back in the first place. Even when you can, it's not recommended, because you'll get far less value redeeming travel rewards that way.

The exception would be if you're struggling with money and need financial help. In that kind of situation, you should do whatever it takes to make ends meet, including cashing in your travel rewards.

Just make sure you compare the cash back and gift card redemption value of your points as some programs offer more value for gift card redemptions. You may find you can get a better deal by putting your points towards gift cards at stores where you shop regularly.

What to do with your travel rewards

Since so much is still up in the air regarding the future of travel, consider taking a wait-and-see approach with your travel rewards. Once leisure travel starts up again, it will take time for demand to increase, so even if you wait, you should still have plenty of ways to use your points. And most importantly, it's the approach that presents the least risk of a canceled trip or of traveling before it's safe.