Why You Need Credit Card Rewards for an Emergency

Posted by Madison on April 6, 2015

We talk extensively about why you need an emergency fund full of cash, or a readily accessible Roth IRA used as an emergency fund. What I found out this past weekend, is how handy it is to have an emergency fund full of various credit card rewards points.

There are times when credit card rewards can be redeemed when cash cannot, or at much higher rates than a cash offer. Supply and demand often drives up prices of certain events, while the credit card rewards redemptions remain constant. Perfect example: the NCAA Final Four.

NCAA Championship

Most of you know I’m from Wisconsin (or you caught it on twitter). If you are following the NCAA tournament, you know the Badgers are playing in the National Championship tonight. Since we have a close family member who went home with the losing team, we scored the leftover tickets to tonight’s championship game for free!

My husband is a huge basketball fan so we dropped everything to make last minute plans to travel to Indianapolis today. There was just one problem; the hotel we want to stay at to walk to the arena is $599 per night! We also didn’t have much time to research and Use a Best Rate Guarantee for a Free Hotel Room.

Cash in Credit Card Points

While the rate at that Hyatt Regency is $599, it’s only 8,000 points. I didn’t have any Hyatt points, but was able to instantly transfer 8,000 Chase Ultimate rewards to Hyatt.

When I cash out the ultimate rewards to maximize cash back it’s worth about $80 at 1 cent per point. I reserved the hotel room for $80 instead of $599!!!

Tips and Tricks for Redeeming Credit Card Rewards

Know where to find good deals quickly. I use hotel hustle to see the best redemption rates for hotels in a given location. You can filter by 5 stars to see the best point redemption rates versus the cash price.

Keep track of credit card rewards balances. I store all of our credit card rewards in AwardWallet. It’s great for credit card reward tracking in addition to frequent flyer mile tracking.

Maximize additional credit card cash rewards. Even though the room is booked on points, we’ll have some incidentals to pay for, like parking. I just picked up the Hyatt credit card last month, but actually I’ll be using an American Express business card (Starwood or Simply Cash) with OPEN for 5% cash back.

Always be polite when you encounter problems. There was actually a snafu during the booking process. When something like that happens, it’s important to ask politely if there is any way they can help you fix the problem. We were compensated 8,000 points for the mistake. In the end, we unexpectedly ended up with free room!

Earning more points at restaurants. While we are there, we’ll work on 5% cashback for restaurants during 2nd Quarter 2015. Both the Chase Freedom and Discover it are offering 5% cash back on restaurants this quarter.

Using Credit Card Rewards for an Emergency

Now, I realize this isn’t a true emergency, but it’s a great example of how keeping some credit card points on hand is helpful to save money at the last minute (or at least avoid overpaying).

You could also apply these same tips for an actual emergency or other unplanned event, like when you have to travel out of town for a family member’s illness at the last minute.

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