Prior to the pandemic, I aspired to become an expert credit card rewards hacker, traveling first class to all kinds of exotic international destinations. Fast forward a year-and-a-half, and I have accumulated a fairly sizable trove of unused points, but with nary a plan nor destination in sight. All the while, I have paid more annual credit card fees than I care to admit, despite my best efforts. This has led me to re-evaluate whether I should take these credit card rewards in the form of cashback, points, or even cryptocurrency.

Cashback is King

Just last year, I would scoff at the idea of taking cashback rewards, an inefficient exercise I would never again partake in. In my youth and ignorance (and poverty), I happily accepted Chase’s Ultimate Rewards points in cold hard cash, about $100 at a time (10,000 points). Upon stumbling down the travel rewards wormhole, I realized that the Points Guy values these rewards at double that amount if redeemed properly, using the Chase portal to book travel and so on and so forth. Never again would I redeem these prized earnings for a mere penny a point.

Building A Chase Credit Card Rewards Starter Kit

The problem with points

The problem with HODLing these rewards points is that there’s an opportunity cost to not redeeming them immediately. In the rewards game, cards are for churning and points are for earning and burning. The Points Guy doesn’t factor in that, even in a short calendar year, the market might go up 20%. Rather than find a home in my brokerage account, my rewards balance simply sits there with Chase. Those points aren’t working for me, which to my optimizing brain means they’re working against me. Traitors!

Now, does anyone actually withdraw cashback rewards and immediately invest that money instead? No chance. Psychologically, rewards points are generally viewed as free money to be spent on splurge purposes—as they should be. That’s what I plan on doing with my points—splurging. I’d like to book a first class plane ticket somewhere new and stay in a hotel I’d never pay for on my own.

But that opportunity cost isn’t limited to investing those would-be dollars. It could simply be in preventing you from purchasing something else that you enjoy with what could be good old fashioned USD. In any case, there’s an opportunity cost to those points staying points for a long period of time. And a risk, too.

As points, rewards are more likely to decrease in value than anything. There’s no guarantee that Chase doesn’t swoop in and say that 100,000 Ultimate Rewards points are now worth $1. Such a move would surely piss off their client base (not that that’s stopped them before), but there are no rules or regulations against it.   

A crypto alternative emerges

On the other side of the digital coin, there’s the recent emergence of cryptocurrency rewards. Depending on where you stand on Bitcoin, this option can either be viewed as getting “cashback” in the currency of the future, or as simply storing the value of these rewards in a vehicle no more or less arbitrary than a specific company’s rewards program.

I’m in the process of slowly allocating a portion of my net worth to Bitcoin and Ethereum. Slowly. To date, I’m still at less than a quarter percent. I’d like to get that number in the 2-3% range to feel like I have enough skin in the crypto game—and a game is exactly what I view it as.  

In doing so, I got involved with the soon-to-be-defunct BlockFi, where I had earned 4% interest on my BTC & ETH every month. The theory was to dollar cost average very tiny amounts back into the crypto space via the existing money I have in Bitcoin and Ethereum without having to actually buy more Bitcoin or Ethereum.

Bitcoin rewards

Crypto as a reward is not a new concept—Coinbase and other platforms have been issuing amounts of Bitcoin for sign-ups and referrals for years. For credit card companies, offering Bitcoin to the Zoomers in lieu of that worthless old Boomer fiat currency or those Millennial airline miles is a way to attract

These credit cards allow for cardholders to redeem credit card rewards in the form of Bitcoin instead of cash or rewards points. Similar to their interest-earning accounts, the BlockFi credit card gave me an opportunity to accumulate Bitcoin without actually going out of my way to purchase more Bitcoin. Sound too good to be true? I guess it was!

The verdict?

I’m going to hold off on taking cashback for another year and see if I can actually plan an international trip on Chase & Visa’s dime at some point in the next 12 months. But if those plans fall through, it might be time to permanently pull the points plug. A bill in hand is worth two thousand Ultimate Rewards points in the bush.  

How do you take your credit card rewards? As a historically bad manager of rewards points, I welcome any and all travel hacking suggestions.