Many card issuers offer multiple cash back redemption options beyond a plain statement credit, including direct deposit, check, and -- notably -- gift cards through the issuer's own redemption portal, sometimes at a bonus multiplier above the base cash value.
A common structure applies a modest bonus -- for example, converting $100 in cash back into $110 of value at a specific participating retailer's gift card -- effectively a 10% bonus for choosing that redemption path over a statement credit of equal cash value.
This bonus exists because the issuer negotiates a bulk discount with the gift card's issuing retailer, and shares a portion of that discount back with the cardholder as an incentive to redeem through the gift card option rather than taking cash directly.
The tradeoff is flexibility: a gift card redemption locks that value to a specific retailer, whereas a statement credit or direct deposit remains fully flexible cash usable anywhere. The bonus is only worthwhile if the cardholder would have shopped at that retailer anyway.
Checking an issuer's redemption portal periodically for available gift card bonus rates -- since these fluctuate and aren't always advertised prominently -- can capture meaningful extra value for cardholders who already regularly shop at a participating retailer.
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Only if the cardholder would have shopped at that specific retailer regardless -- otherwise the locked-in flexibility loss can outweigh the bonus value.
No -- this varies significantly by issuer and by which retailers currently participate in a bonus redemption arrangement.