October 20, 2020

Why I’m making credit card points part of my emergency fund in 2020

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  • Even before the pandemic hit, 2020 was going to be the year I built up my emergency savings fund.
  • I was able to increase my income and add to my fund at the beginning of the year, but I’ve had to get more creative in recent months.
  • One way I’m boosting my emergency fund during the pandemic is earmarking my credit card points and miles for expenses.
  • I haven’t cashed them in yet, but I could sell my JetBlue points for cash if I needed to, and redeem Capital One miles for essential purchases on Amazon.
  • See Business Insider’s list of the best rewards credit cards »

As 2019 came to a close, I found myself with a handful of very lofty financial goals. With the new year, I wanted a fresh start with saving and investing, especially after years of doing very little of either of those things.

Approaching my fifth year of working for myself, one of the major things I wanted to do was build an emergency savings fund that I could tap into in case anything happened (like loss of work or a major health problem).

I had about $2,500 in an account labeled “emergency cash” but knew, based on what experts have shared, that I needed at least six months worth of expenses saved up. I was far away from that goal but wanted to get smarter about my spending in 2020 so I could put more money into that fund.

The pandemic threw a wrench in my plans

The first few months of the year worked in my favor and I was able to increase my income, decrease unnecessary spending, and put $1,250 into my emergency account.

When the pandemic hit — along with the realization I likely would have to tap into that emergency fund if I lost projects and clients — it was time for me to get creative. I wanted to make sure I could still add to the fund if the pandemic got worse, continued on, or if my work as a freelancer and a business owner came to a full halt.

I’m rethinking how I’ll use my credit card points

One way that I was able to continue growing my emergency fund was to tap into an unused resource that I had been collecting for over five years: credit card points.

I’d been hoarding these points and never tapped into them. But after the pandemic started, I began to research ways to use my stash of about 200,000 points and miles (between two credit cards) as part of my emergency savings plan.

I have a JetBlue Card (because I flew JetBlue two to four times a month pre-pandemic and was able to get great travel points through the card) and a Capital One® Spark® Miles for Business for my business account (because of the travel miles I hoped to use in the future for a big vacation).

Rather than use the miles for lavish trips or flights to a faraway destination, here’s what I’ve decided to do with my points in the future, when I need to tap into that fund and don’t want to pull out all of the cash.

I can sell my rewards

With my JetBlue Card, I have less options when it comes to converting the points into anything but flights or vacations. However, if I need to cash in the the points for something other than a trip, I can use a handful of different third-party sites to sell the miles for money.

Websites like Cash for My Miles or Sell My Miles will calculate how much cash they’re willing to buy your miles for. On a quick calculator, for research, Cash for My Miles quotes me $100 for 23,000 JetBlue points.

Regular APR

15.99%, 19.99% or 24.99% based on your creditworthiness.

Featured Reward

Earn 10,000 bonus points after spending $1,000 on purchases in the first 90 days

Intro APR

0% introductory APR for the first twelve billing cycles following each balance transfer that posts to your account within 45 days of account opening.

Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Details
  • Pros & Cons

    • 10,000 bonus points after spending $1,000 on purchases in the first 90 days
    • 50% inflight savings on cocktails and food purchases
    • No foreign transaction fees
    • 3X points on eligible JetBlue purchases
    • 2X points at restaurants and grocery stores
    • 1X points on all other purchases
    • Points awarded to your TrueBlue account don’t expire
    Pros
    • No annual fee
    • 2x points at restaurants and grocery stores
    • Cardholders get 50% off in-flight food and beverage purchases
    Cons
    • Doesn’t offer a free checked bag
    • Sign-up bonus is relatively low

    I can use them for emergency travel 

    I also decided that part of my emergency strategy would be to keep enough miles on hand for at least two round-trip flights in case there’s an emergency and I need to travel somewhere, such as to visit my family in Florida or to get a health treatment at a hospital in another state.

    Keeping enough points to pay for two round-trip flights (which could cost up to $1,000) adds even more value to my emergency planning.

    I can use them to lower my statement balance

    During my research, I learned that I can use miles from my Capital One® Spark® Miles for Business to pay for purchases on my credit card. While I try to be mindful about spending, if my income takes a dip and I can’t pay off my credit card bills, I could put them toward paying off big purchases. That way, I could carry a lower balance on my credit card to protect my credit score and lower my overall debt.

    Annual Fee

    $95, waived the first year

    Regular APR

    20.99% variable APR

    Featured Reward

    50,000 miles once you spend $4,500 on purchases within the first 3 months

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Details
  • Pros & Cons

    • Unlimited 2X miles on every purchase with your business credit card with no blackouts or seat restrictions and no minimum to redeem
    • One-time bonus of 50,000 miles – equal to $500 in travel – once you spend $4,500 on purchases within the first 3 months from account opening
    • $0 intro for the first year, $95 after that
    • 5X miles on hotel and rental car bookings through Capital One Travel℠
    • Receive up to $100 credit for Global Entry or TSA Pre® when you use your Spark Miles card
    • Quickly and securely download your purchase records into multiple formats including Quicken®, QuickBooks® and Excel®
    • No Foreign Transaction Fees
    Pros
    • No bonus categories to keep track of
    • Annual fee is waived the first year
    • You can redeem miles to erase travel purchases from your statement, or you can transfer to various airline and hotel programs
    Cons


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    I can use them to cover essential purchases

    Another part of my emergency plan is to cash in my points to help pay for essentials such as groceries and household items. My Capital One® Spark® Miles for Business allows me to link my rewards to my Amazon account and use the miles to pay for purchases at checkout. While I try to use Amazon only for essential items — not to splurge on unnecessary purchases — using points in an emergency situation can cover those important items without having to dip into the cash in my emergency account.

    While I’ve spent years accumulating points and travel rewards so I can take vacations, the pandemic has switched my focus to building up an emergency fund. I’ve changed up the way I plan to use my credit card points, and it feels like a mature decision to use my rewards to stay out of debt longer if my finances were to take a big hit.

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    Business Insider may receive a commission from The Points Guy Affiliate Network, but our reporting and recommendations are always independent and objective.

    Please note: While the offers mentioned above are accurate at the time of publication, they’re subject to change at any time and may have changed, or may no longer be available.

    Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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