Is instantly redeeming credit card rewards a good idea?

Curtis Arnold
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Curtis Arnold
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Is instantly redeeming credit card rewards a good idea?

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Americans are not known for delayed gratification, particularly when it comes to shopping in the 21st century. Such services as Amazon Prime and Walmart+ offer instant retail therapy and have transformed the way we shop.

Unfortunately, credit card reward programs, which have grown increasingly popular over the past couple of decades, have historically been anything but instant. For example, many have required you to meet certain spending thresholds and/or have a minimum number of reward points earned before you can redeem them.

Fortunately, competition and consumer demand are resulting in not only more rebate redemption options, but also less restrictions. Some issuers are even offering instant options that happen in real time.

I experienced instant redemption firsthand during the holidays in a surprising manner. I was checking out at my favorite retailer and was asked if I wanted to redeem my card points towards my purchase. All of this happened while I was trying to insert my card chip into the card terminal.

I was so caught off guard that I accidentally clicked “Yes, I would like to redeem” without even really realizing what I had done. The good news is that my purchase price immediately dropped, much to my delight.

My experience got me thinking. While instant redemption was certainly very convenient, I wondered if there were any downsides. I also wondered if different card issuers offered different types of immediate redemption options and what the pros and cons of each option were. Such questions became the genesis of this article.

What are instant redemption credit card rewards?

While the ability to instantly redeem card reward dollars/points is becoming increasingly popular, it is far from a new concept. U.S. Bank helped pioneer instant redemption by launching Real-Time Rewards in 2015, which allowed cardholders to instantly redeem points via text messages.

In the past few years, card issuers have increasingly offered instant card redemption options at checkout (online and in person) where you can conveniently redeem any reward points you have, instantly reducing the cost of the goods or services you are purchasing.

One such service is Shop with Points which is offered to American Express cardholders in partnership with This service allows cardholders to instantly use their reward dollars while checking out online at Customers can use their reward dollars to cover all or part of their purchases and there are millions of eligible items on Amazon that qualify for this program.

Similarly, the Citibank Pay with Points program lets eligible card holders redeem points in certain categories to cover recent purchases with a statement credit. After you make a purchase, you log into your Citi account and click on that purchase and then click “Redeem.” You will receive a statement credit within two to three business days- not exactly instantly, but much quicker than waiting until you get your bill in the mail!


I am an Amex customer and found out about the Shop with Points program by quickly scanning a recent bill. I do this on a regular basis to track my rebates and to learn about any new features. Taking a couple of minutes each month to review your statement can really help you maximize your earnings!

What are the pros and cons of instantly redeeming credit card rewards?

If you are considering instantly redeeming some or all of your card rebates, then it is helpful to know at least a few of the pros and cons before you make a quick, uninformed decision while checking out (with a line of impatient customers behind you).


  • Is very convenient. Beverly Harzog, a nationally recognized card expert and author of The Debt Escape Plan, notes that “being able to redeem points at the checkpoint can be very convenient. You can save money with minimal effort on your part.”
  • Helps you make budget-friendly purchases. Gerri Detweiler, credit and small business expert and coauthor of Finance Your Own Business: Get on the Financing Fast Track, points out that “if you need to make a purchase that’s not in your budget or if your cash flow is tight, using points on the spur of the moment may help you keep your spending on track.” This is particularly true if your reward points cover the full cost of the good or service you are buying.


  • Bad bang for your buck. Some cards don’t have a great redemption value. For instance, according to Harzog, one of her cards “offers 50 cents per point if I redeem instantly. Simply put, I can get much higher value with other redemption options that require me to wait longer.”
  • Excessive spending trap. The ultimate goal of any rebate program is to get you to spend more. In short, it’s very easy to fall into the “instant gratification trap” (rather than delaying your gratification). Detweiler cautions that impulse spending can be dangerous and that “no amount of points or discounts will make a purchase you don’t really need worth it.”

Probably the biggest downside from my perspective is the poor redemption value in comparison to other traditional methods, such as statement credits. Harzog offers the following tips to help you maximize your rebates:

“If you use rewards credit cards, have a goal in mind for redeeming them. Do you want a free ticket, for example? Find out how many miles or points you need for that. Don’t waste your rewards on things that don’t meet your goals. Understand your rewards program so you can maximize the value of each rewards point.”

She adds that, although you want to get the best value for each point or mile you have earned, “there might be circumstances where you’re willing to take a lower value to save time or because you need the points to afford the product. Or maybe it’s a frivolous purchase and you’re having trouble justifying it. It’s important to identify your needs and make a decision that’s best for you at that time.”


My card_name recently offered me the option to instantly redeem 2,500 points for $20 off my purchase price. Normally, I can redeem 2,500 points for a $25 statement credit. So, as you can see (at least in this example), instant redemption was a poor choice if I was trying to get the most value out of my points.

Instant rebates on retail or store credit cards often offer the best value

Retail credit cards that are branded with a particular store often get a bad rep because they are typically associated with high-interest rates. However, if you don’t carry a balance, then interest rates shouldn’t really be a concern (since you will never incur interest charges) and you can focus on the rewards.

When it comes to instant rewards and perks, two retail cards really stand out. In my opinion, these two cards are the best choice in terms of simplicity and value.

The Target RedCard

The Target RedCard offers an instant 5% rebate or savings on their debit and credit card purchases. As a result, you don’t have to track points at all since the rebate comes right off your purchase price and shows on your receipt. I have personally used the Target debit card for years and can attest that it offers exceptional value even if you only shop occasionally at Target.

Herzog explains that “not everyone wants to track rewards. If you want to save money, but yearn for simplicity, then these [store] cards are good options.” At the end of the day, it really depends on your needs and how hard you want to work to save money.

Detweiler adds: “I love Target RedCard’s instant discount. Unless I’m trying to meet a spending requirement for a welcome bonus on another reward card, I always choose it to save money on my Target purchases.”

Lowes Advantage Credit Card

Lowes offers the Lowes Advantage Card that rewards new cardholders with a 20% off coupon for a one-time purchase (the maximum discount is $100 with this offer). Similar to the Target Card, you will earn a 5% ongoing instant rebate off eligible Lowes purchases. So, if you are a DIYer, this card can translate into significant savings over time.


Many issuers offer the option for cardholders to earn instant discounts while shopping online with select retailers. In order to take advantage of these discounts, you simply have to log on to your issuer’s rewards portal, which you can usually access via your online account.

Herzog is a fan and observes that “some issuers will offer extra discounts at specific stores for certain time periods.” She often sees big discounts during the holidays for example. She cautions, though, that it’s always a good idea to compare prices and that it might make the most sense to utilize your issuer’s portal “if there are sales on the type of product you’re seeking.”

Final thoughts

I have always been taught that while instant gratification can be a good thing, it usually is not the best course of action. This seems to be the case with instant credit card rebates. The bottom line is that you should make sure you’re not leaving too much on the table before you make a rash decision to cash in on your rewards while paying for a product or service.

The good news is that there are several flavors of instant rebates and a few offers do not devalue your points at all. The Apple Card, for instance, allows cardholders to earn full (not devalued) rewards in the form of Daily Cash, which becomes available as soon as a transaction is posted to the account.

Offers like the Apple Card are a win-win. They allow you the ability to redeem your rewards instantly without losing much, if any, of your rebate earnings.

Curtis Arnold
CardRatings Founder

Curtis founded in 1998 and, in so doing, helped pioneer the concept of rating credit cards. He has been a nationally recognized expert in consumer credit for well over 20 years. He is the author of “How You Can Profit from Credit Cards: Using...Read more

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