It’s so very tempting to use your Amazon Rewards points to buy things on Amazon—after all, the amount you have is shown to you right there in the checkout process. But spending your points on purchases is a sure way to lose money.
How do you lose money by using your rewards on purchases? Because you only get cashback when you use your card, not when you use your points. Here’s what that looks like in practice.
Let’s say you have the equivalent of $100 worth of Amazon points, and you want to buy something that costs $100. In the first scenario, you use no points, and you put the purchase on your Amazon Visa or Amazon Prime Store card. For doing so, you get 5% back (the high cashback on Amazon-based purchases is the biggest perk of using one of Amazon’s cards). The effective cost of the product $95.
In the second scenario, you use the $100 worth of points to pay for the $100 item. You might think, “Yes! This $100 product is free because I’m using my points!” but here’s the sneaky trick they play on you: the use of the points doesn’t generate cashback. The $100 product is $100, and you lose out on the $5 you’d get as a cashback reward—and the cashback is likely the whole reason you got an Amazon card in the first place.
The smart thing to do? Don’t let the thrill of getting something for “free” get the better of you. Instead, purchase the item with your Amazon card, then log into your card account. There, each billing cycle, you can apply the accumulated cashback benefit to either your statement balance or have it deposited into your bank account—both much better options than missing out on it altogether.
Source = “https://www.lifesavvy.com/18676/stop-spending-your-amazon-reward-points-on-purchases-for-better-cash-back/”