Think of it as a Zen koan: If you’ve earned rewards on your credit card, but you can’t redeem them, are they rewards at all?
A minimum redemption — a requirement that you earn a certain amount of rewards on your credit card before cashing in — can make it hard to get your money’s worth on earned points, miles or cash back. Depending on a card’s rewards rate and minimum redemption, you may have to spend thousands of dollars before you can redeem any rewards.
The problem is, minimum redemption terms can be difficult to find when you’re looking to apply for a card. While credit card issuers are required by law to prominently disclose APRs and fees in what’s called a Schumer box, they aren’t obligated to disclose minimum redemptions the same way. Sometimes, you need to contact the issuer directly to find out.
Why minimum redemptions matter
Minimum redemptions on credit cards aren’t necessarily deal-breakers, but in some cases, they can lower the effective rewards rate on your credit card.
Take the Blue Cash Preferred® Card from American Express, for example, which has a minimum redemption of $25. If you stopped using the card when your rewards balance was at $10, you wouldn’t be able to cash in on those earnings unless you spent at least $250 more. That’s assuming you could earn the highest possible rewards rate – 6% back at grocery stores – on all your purchases. You might have to choose between losing out on those rewards, or holding onto a card that no longer fits your spending habits.
For big spenders or people who use a particular card regularly, such a restriction probably wouldn’t be an issue. But for people who spend more slowly, restrictions on redemptions can make the card less valuable.
Minimum redemptions: Key findings
NerdWallet identified the minimum redemptions on more than 30 credit cards by looking at the cards’ terms and conditions or contacting customer service representatives. We then calculated the minimum amount of spending you’d have to put on each card to before you’d be able to redeem your rewards.
Here’s what we found:
- Capital One and Discover have no minimum redemptions on any of their credit cards. Cardholders can redeem rewards in any amount. That’s good for frugal spenders and those who spread purchases over several different credit cards.
- Among issuers surveyed, Barclaycard had the highest minimum redemption requirements. Sign-up bonus aside, you’d have to spend $5,000 on the Barclaycard Arrival Plus™ World Elite MasterCard® before you were able to redeem your miles for travel statement credit. You’d have to spend $3,333 before earning enough cash back to redeem on the Barclaycard CashForward™ World MasterCard®.
A full list of our findings and methodology is below.
Minimum redemptions on cash-back cards
| Credit Card | Minimum redemption | Amount of spending required to meet minimum redemption* |
|---|---|---|
| *Rounded to nearest dollar. Does not include sign-up bonuses or limited time offers. Calculated using the highest possible rewards rate on each credit card. | ||
| Capital One® Quicksilver® Cash Rewards Credit Card | $0 | Not applicable |
| Capital One® QuicksilverOne® Cash Rewards Credit Card | $0 | Not applicable |
| Discover it® Chrome- Double Cash Back your first year | $0 | Not applicable |
| Discover it®- Double Cash Back your first year | $0 | Not applicable |
| U.S. Bank Cash+™ Visa Signature® Card | $0 | Not applicable |
| Chase Freedom® | $0 for travel and Amazon.com / $5 for gift cards / $20 for cash back | Not applicable for travel and Amazon.com / $100 for gift cards / $400 for cash back |
| Blue Cash Preferred® Card from American Express | $25 | $417 |
| BankAmericard Cash Rewards™ Credit Card | $25 | $833 |
| Blue Cash Everyday® Card from American Express | $25 | $833 |
| Citi®Double Cash Card | $25 | $1,250 |
| SunTrust Cash Rewards Credit Card | $25 | $1,250 |
| TD Bank Cash Rewards | $25 | $2,500 |
| PNC Cashbuilder | $50 | $2,857 |
| Barclaycard CashForward™ World MasterCard® | $50 | $3,333 |
Minimum redemptions on other cards
| Credit Card | Minimum redemption | Amount of spending required to meet minimum redemption* |
|---|---|---|
| *Rounded to nearest dollar. Does not include sign-up bonuses or limited time offers. Calculated using the highest possible rewards rate on each credit card. | ||
| Capital One® Venture® Rewards Credit Card | 0 miles | Not applicable |
| Capital One® VentureOne® Rewards Credit Card | 0 miles | Not applicable |
| Discover it® Miles-Double Miles your first year | 0 miles | Not applicable |
| Chase Sapphire Preferred® | 0 points for travel and Amazon.com / 500 points for gift cards / 2,000 points for cash back | Not applicable for travel and Amazon.com / $250 points for gift cards / $1,000 for cash back |
| U.S. Bank FlexPerks® Travel Rewards Visa Signature® Card – 20,000 Bonus FlexPoints | 0 points for travel / 5,000 points for merchandise, gift cards and statement credits | Not applicable for travel / $1,667 for merchandise, gift cards and statement credits |
| Citi ThankYou® Premier Card | 100 points | $33 |
| PenFed Platinum Rewards Visa Signature® Card | 1,000 points | $200 |
| Barclaycard Rewards MasterCard® | 1,000 points | $500 |
| Wells Fargo Propel 365 American Express | 2,500 points online/ 2,000 points at the ATM | $833 online, $667 at the ATM |
| Wells Fargo Propel World American Express | 2,500 points online/ 2,000 points at the ATM | $833 online, $667 at the ATM |
| Union Bank American Express Card | 2,500 points | $833 |
| Barclaycard Arrival™ World MasterCard® | 2,500 miles | $1,250 |
| NFL Extra Points Credit Card | 2,500 points | $1,250 |
| BankAmericard Travel Rewards® Credit Card | 2,500 points | $1,667 |
| The Amex EveryDay® Preferred Credit Card from American Express | 5,000 points | $1,667 |
| Premier Rewards Gold Card from American Express | 5,000 points | $1,667 |
| The Amex EveryDay® Credit Card from American Express | 5,000 points | $2,500 |
| The Platinum Card® from American Express | 5,000 points | $2,500 |
| Barclaycard Arrival Plus™ World Elite MasterCard® | 5,000 miles for cash back/ 10,000 miles for travel statement credit | $2,500 for cash back/ $5,000 for travel statement credit |
Current as of December 11, 2015.
The bottom line
Before choosing a rewards credit card, ask yourself whether a steep minimum redemption might prevent you from cashing in on all the rewards you’ve earned. Consider your exit strategy, that is, what you’ll do with your rewards if you decide to stop using the account. If you think a minimum redemption could keep you from your rewards, consider another credit card.
Remember, a high rewards rate on a credit card is only the beginning of a story. Its minimum redemption is the often-overlooked, but crucial, next chapter.
Methodology
In this survey, we focused our search on cards that offer cash-back or travel statement credit options. After identifying the minimum redemptions on these cards, we divided the minimum redemption amount by the highest possible rewards rate to find the minimum spending needed to redeem rewards. We excluded sign-up bonuses and limited time offers.
For the Blue Cash Preferred® Card from American Express, for example, which has a $25 minimum redemption and offers 6% cash-back at grocery stores, the math is as follows:
($25 / 0.06) = $416.67 minimum spending needed to redeem rewards.
Note that if you made purchases that weren’t grocery store purchases, you’d have to spend more before earning enough rewards for a redemption.
Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.
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