Watch out for minimum redemption on certain cards

True to their name, rewards credit cards can be richly rewarding, offering generous benefits and incentives on spending. That’s why many of us choose rewards cards over run-of-the-mill cards.

But watch out that minimum redemptions don’t wipe out your gains. In certain cases, card issuers may restrict your ability to take advantage of rewards such as cash back, gift cards, merchandise, travel or other goodies.

What is a minimum redemption?

A minimum redemption means you must accumulate a minimum number of points before you can redeem your rewards. For example, a rewards card might require you to pile up $25 in cash back or 2,500 points before you can redeem.

Why do minimum redemptions matter?

Minimums may not matter much to you if the card perks and awards you’re spending toward are worth the wait, or if you charge enough to routinely hit the minimum. But if you don’t, what good are rewards you can’t collect?

Some cards give you the flexibility to redeem rewards as you go, without being held back by minimum redemptions. If you want to earn a little something for every dollar you spend, try to choose a card that doesn’t impose such restrictions. For instance, neither the Discover it® Cash Back card nor Chase Freedom Unlimited card impose minimum redemption amounts for cash. With both, you earn and redeem as you go.

Rewards cards requiring the same minimum amount of points for redemption don’t always require the same spending. For example, the Blue Cash Everyday® Card from American Express and the Blue Cash Preferred® Card from American Express both have a minimum redemption of $25, but you’ll hit that with $417 charged on Blue Cash Preferred, whereas Blue Cash Everyday requires $833 – because you get more points per dollar with the Preferred.

Keep in mind, if you don’t charge a lot each month, it may take months to score a redemption. Certain cards require you to spend hundreds of dollars before the minimum redemption amount kicks in and you’re able to redeem your rewards.

Where to find the minimum redemption

If you’d rather avoid this, do some research before you apply for a rewards card. Minimum redemptions are not something you will see without some digging.

They will not appear, for example, on a Schumer box. You will find minimum redemptions explained in the card’s terms and conditions, but they may be called something else such as “threshold amount” or “spend threshold.”

Credit cards with minimum redemptions

Minimum redemption requirements vary from card to card. Here are examples of four cards that come with minimum redemption amounts.

• American Express® Gold Card – at least 5,000 points, or $1,250 in spending, required to redeem
• Bank of America® Premium Rewards® credit card – at least 2,500 in points for all redemptions
• Citi® Double Cash Card – at least $25 in cash back to redeem as a statement credit or direct deposit
• Wells Fargo Go Far® Rewards program – at least 2,500 Go Far Rewards points ($25) to redeem as a statement credit, check or direct deposit, or at least 2,000 points ($20) to redeem for cash at a Wells Fargo ATM

How to make sure you meet the minimum for rewards redemption

A savvy cardholder can employ a number of tactics to make sure they’re meeting the minimum for rewards redemption. Among them:

• Pick the right card for your spending habits. If you regularly jet off for business or pleasure, find a rewards card that supplies lucrative travel rewards and perks – and where you’ll easily hit minimum redemptions for those purchases. Likewise, if spend regularly on dining, select a card with robust restaurant rewards. Your spending activity should align with a card’s rewards to help ensure you’re not only meeting the minimum redemption requirements but getting the maximum reward for it.
• Review the terms and conditions carefully. Be sure you’re aware of redemption rules before you apply.
• Charge everyday expenses. Make sure groceries, gas, cellphone bills, restaurant tabs and all other regular, significant expenses are charged on a rewards card, where possible. But remember, if you carry a balance from month to month, the interest you’ll end up paying will reduce the value of your rewards, minimum or no minimum.
• Make charitable donations. If you can use your credit card to make donations, you can get extra points.
• Add authorized users. The more charges to your credit card, the faster you’ll hit those minimum redemptions.