[Strategy] Why redeeming for shopping vouchers is not a good idea

Redeeming Shopping Voucher

Many people redeem their credit card rewards points for shopping vouchers.

However, while these shopping vouchers are almost as good as cash, you can certainly get more value in redeeming your rewards points for frequent flyer miles instead.

To illustrate my point, I will use the rewards programmes from Citibank, DBS and UOB to compare two redemption: a S$50 shopping voucher with Isetan and a return business-class flight to Tokyo on Singapore Airlines.

$50 ISETAN SHOPPING VOUCHER

Picture from Isetan’s website

From the banks’ catalogue, I found out the number of points required to redeem for a S$50 Isetan shopping voucher. Then I calculated the value of each point by dividing the value of the redeemed item by the points needed.

Points required to redeem $50 Isetan voucher

BankCurrencyAmountValue/Currency
CitibankCiti Dollar12,0801 Citi Dollar = (S$50/12,080) = S$0.004
DBSDBS Points3,0001 DBS Point = (S$50/3,000) = S$0.017
UOBUNI$3,2751 UNI$ = (S$50/3,250) = S$0.015

RETURN TO TOKYO ON SQ

I did a search on the cost of a return business class ticket between Singapore and Tokyo on Singapore Airlines.

Return business-class air ticket from Singapore to Tokyo

ModeMiles neededCash
Paying with cash0S$4,277.80
Paying with miles68,000S$377.80
Amount Saved:S$3,900.00

In the above redemption, 68,000 Krisflyer miles is able to save the flyer S$3,900. Once again, I found out the points required from the banks’ websites and did the calculation.

Points required to redeem 68,000 Krisflyer miles

BankCurrencyAmountValue/Currency
CitibankCiti Dollar170,0001 Citi Dollar = (S$3,900/170,000) = S$0.023
DBSDBS Points34,0001 DBS Point = (S$3,900/34,000) = S$0.115
UOBUNI$34,0001 UNI$ = (S$3,900/34,000) = S$0.115

COMPARISON

I put the calculations together and compare the difference in the reward points’ value for the two redemption.

BankCurrencyVoucherFlightFactor
Citibank1 Citi DollarS$0.004S$0.0235.54
DBS1 DBS PointS$0.017S$0.1156.88
UOB1 UNI$S$0.015S$0.1157.51

From the above table, we can easily deduce that one who redeems for the return air ticket to Tokyo can get up to 6.5 times more value when compared to another person who redeems for Isetan shopping voucher instead.

CONCLUSION

While this is only one comparison, this pattern is generally true when comparing between redeeming for shopping vouchers and for business-class flights.

Therefore I wouldn’t recommend redeeming your hard-earned rewards points for shopping vouchers unless your points are expiring and shopping vouchers are the only items that you can redeem for.

It can take some time to accrue the rewards points needed for air ticket redemption but with the help of Card Cow Miles, you can accrue rewards points faster and smarter.

Do you redeem for shopping vouchers too? Will you consider switching to frequent flyer miles instead?

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