Different credit cards come with a variety of redemption options, so deciding how to spend your bonus could lead to several results:
Statement credit: Perhaps the least sexy, but one of the most convenient and common options. This type of redemption is easy to manage since the earned credit is usually added right into your rewards pool or automatically goes toward your card balance.
Online shopping checkout: Essentially reserved for cash back and points cards, some issuers allow cardholders to use their rewards while paying for online purchases at certain retailers. This can be useful if you’ve found a specific item you’re interested in. For example, Discover allows you to use your cash back rewards at Amazon.com’s checkout.
Merchandise or gift card: Some cards reward generously for purchases made through their shopping portal, while others may not reward so well for merchandise or gift cards. That’s why it’s best to check before making a redemption. Travel card issuers may offer gift card rewards, but it’s often inadvisable because you’re losing value redeeming rewards and miles for gift cards. Some cash back cards offer decent deals, however: with Discover you can purchase gift cards ranging from $5 to $200 (in increments of $5)and the Citi Rewards+ Card rounds up points toward gift card redemptions.
Travel – airline and hotel booking: Redeeming for travel rewards can typically yield the highest value depending on your issuer’s redemption system. Airline card rewards are best used for brand-loyal flights, although there are many general-purpose travel cards that allow you to redeem points for most travel-related events. That means if you have a trip to Europe planned for next year, you can redeem for airfare, hotel, limo service and more. Similarly, it’s pretty much a guarantee that the best way to use your hotel card’s rewards is with hotel stays. Hotels usually offer tiers, where the higher-end hotels or resorts will use up your points more quickly, but that’s OK if you treasure the exclusive experience.