All About the Refundable Hotel Trick

Earning points at an advanced level is all about drawing upon a wide range of tricks and strategies to help you accomplish your goals, some of which might not be immediately intuitive and/or might require a fair bit of creative thinking. In this post, I wanted to discuss what’s known as the “refundable hotel trick”, which is essentially a way to manipulate your credit card balances in a way that’s helpful in many situations. 

What’s the Refundable Hotel Trick?

When booking a hotel, the cancellation policy can vary from strictly non-refundable, to prepaid but refundable at any time before check-in, to a totally flexible rate that you don’t need to pay until you arrive at the hotel. The second case is particularly interesting, since you can charge the stay to a credit card of your choice and know with 100% certainty that you can get a refund on it at any point before the date of the reservation.

Booking a refundable hotel, with the intention of eventually cancelling it, therefore generates an artificial, temporary travel-related purchase on your credit card which can be used to accomplish a variety of goals, as I’ll discuss below. 

Note that the same thing can be accomplished with any refundable item, such as airfare pr retail goods. However, hotel reservations tend to be the easiest for these purposes, for the following reasons:

  • It’s pretty easy to generate a charge for the exact amount you require

  • Unlike airfare, the cancellation policies are relatively straightforward, and a fully-flexible hotel stay is relatively easy to find

  • Unlike retail goods, a hotel stay is a travel-related purchase, which is a prerequisite for some of the below-illustrated reasons that you might want to use the trick

Note also that if the time between creating the reservation and cancelling it spans a period of multiple months, then you may have to float the money in the meantime by paying off your credit card bill. You will eventually get your money back once you receive the refund, but the money being floated in the meantime may have some opportunity cost associated with it, such as the income it could earn if it were put into investments. So that’s something else to consider.

Now, why on earth would someone want to make dummy reservations at hotels around the world? Well, let’s see…

Meet Minimum Spending Requirements

Some of the credit cards with the best bonuses also tend to have the highest spending requirements in order to attain those bonuses. For example, the American Express Business Gold Card requires you to spend $5,000 in the first three months in order to avail of the welcome bonus of 40,000 MR points. These days, the Business Platinum Card has an even higher spending requirement of $7,000 in the first three months. Even the personal Platinum Card has recently seen its spending requirement raised to $5,000 in the first three months as well.

These spending thresholds can be onerous for many individuals, and you never want to spend money that you wouldn’t otherwise have spent, since that defeats the whole purpose of using points to save money on your travels. Instead, one of the best ways to tackle the spending requirement is to use the refundable hotel trick to buy yourself as much time as you need to achieve the spend organically. 

Here’s what I mean. Say that you’re targeting a spend threshold of $5,000 in three months, and by the two-month mark you find that you’ve only managed to spend $2,000. At this rate, you’re going to fall short of your goal, which would mean missing out on the signup bonus and spurning a precious “hard check” on your credit report.

To avoid that unfavourable outcome, hop on Expedia, find a $3,000 refundable hotel reservation, and charge it to your card. Make sure to look for the “Free Cancellation” remark. To make your life easiest, ensure that the hotel stay is scheduled for a long time from now – say, 11 months in the future. 

As you’re making the reservation, make sure you select “Pay online now” rather than “Pay at the hotel”, since you want to be charged immediately. 

Once that’s all done, you’ve now technically met your $5,000 spending requirement, and you should see your bonus points come through shortly.

Of course, you still need to spend that extra $3,000 before processing the refund of your hotel stay (or else the bonus points that you’ve received will simply be clawed back), but the good news is that instead of being faced with a one-month timeline to spend the remaining $3,000, you now have 11 months! 

Continue spending normally on the card until you’ve reached a point such that refunding the hotel would keep you above $5,000 in total spending. After that, you can safely cancel the hotel reservation, since you know that your total spending won’t dip below $5,000 and thus won’t invalidate your welcome bonus. You then get back the $3,000 you’ve floated and complete the spending requirement on your credit card in a stress-free fashion.

Thanks to the refundable hotel trick, you’re able to apply for the best credit cards on the market without feeling intimidated by the spending requirements. Note that I wouldn’t use this trick to meet the spending on US-issued credit cards, since they’ve specifically added terms and conditions to call it out, but it works pretty well for the cards in the Canadian market. 

Cash Out Travel Credits

Some credit cards provide a “travel credit” as part of their benefits, which can only be applied to travel-related charges, such as airfare, hotels, car rentals, or vacation packages. The best-known example is the American Express Platinum Card and its annual travel credit of $200. Meanwhile, the CIBC Aventura Visa for Business includes a travel credit of $120 as part of its signup offer.

However, not everyone may be able to find a use for these credits. For example, if you travel primarily using points, then it might be rare for you to spend $200 or more on a single travel-related transaction.

Furthermore, most if not all of these travel credits stipulate that they can only be applied to bookings made through the financial institution’s very own travel agency (such as Amex Travel or CIBC Rewards), making it impossible to apply the credits to ancillary charges (such as taxes and fees on award flights) or stuff that the travel agency can’t book through their systems (such as low-cost budget airlines in Europe and Asia).

It’s therefore popular to use the refundable hotel trick to “cash out” these travel credits. This is done by making a dummy hotel reservation and applying the travel credit at the time of booking, and then receiving a refund of the full reservation amount later on. The travel credit has therefore been transformed into a statement credit.

Take the Amex Platinum for example. The annual $200 travel credit is often used to offset the $699 annual fee on the card; moreover, since the travel credit is available every calendar year, you can use it twice within your first membership year and then cancel the card before you get hit with the second year’s annual fee, reducing your net outlay to $299. 

You do this by finding a refundable hotel reservation on the Amex Travel portal that’s worth at least $200. Let’s take the example below, which comes in at $269.54.

Make sure that the cancellation policies say something like “Hotel cancellations made X amount of time prior to check-in are subject to a fee of Y” – the implication being that cancellations made before X are subject to no fee.

At the time of booking, you avail of the option to apply your $200 travel credit, bringing your net charge to $69.54.

Screen Shot 2018-08-15 at 12.29.49 AM.png

And after the charge posts to your account, you call up Amex and request a cancellation, at which point the full $269.54 is refunded to your account. This offsets against the $69.54 charge, meaning you now have a credit balance of $200. Cash in hand.

Use Points for Purchases at a Favourable Ratio

Semi-related to the above, but with points instead of a fixed-value travel credit. There’s lots of credit cards out there with their own proprietary points systems, and the signup bonuses on these cards are often marketed as “$X towards travel”. The Scotiabank Gold American Express, for example, currently offers 15,000 Scotia Rewards points, which can be redeemed at a ratio of 1 cent per point (1cpp) for $150 towards travel purchases of any kind. (Historically, the card offered as much as 35,000 Scotia Rewards points, which was $350 towards travel.)

Note that these points can typically be used for redemptions of merchandise or gift cards, but at an unfavourable ratio. To illustrate this, let’s imagine that you were interested in redeeming your points for a spanking new KitchenAid® 4-Slice Long Slot Toaster with High Lift Lever. As you can see, the Scotia Rewards website indicates that the toaster of your dreams will cost you 20,300 points.

But if you were to go on Amazon, you’d see that the same product can be had for $99, so it really ought to be valued at 9,900 points as a Scotia Rewards redemption, if you were somehow able to use the 1cpp valuation of Scotia Rewards points that travel-related purchases enjoy.

In fact, you can achieve exactly that, by making the purchase on Amazon using your card, applying the refundable hotel trick on a $99 hotel, and thus effectively cashing out 9,900 points for a $99 statement credit that offsets the cost of your toaster.

In general, then, the refundable hotel trick can be employed to use your points for any purchase at the same ratio as the travel-related purchases. Don’t feel “locked in” to redeeming your points on travel just because the program tells you so.

A similar principle can be applied to, say, the Platinum Card or the Cobalt Card. These cards allow you to redeem Membership Rewards points at a ratio of 1cpp for travel purchases and 0.7cpp for all other purchases; with the refundable hotel trick, you can effectively redeem MR points for all purchases at 1cpp (although that’s a sub-optimal way to redeem MR points and you should definitely aim for even better value).

Which Points Programs Work?

Lastly, note that while the trick works pretty well with most programs, there are a few exceptions. Some program might refund the points to your account rather than the full charge, thus leaving you in the same position you started and negating the trick. 

Most anecdotes seem to indicate that TD Rewards and CIBC Aventura are programs that do this. If you were to refund a hotel reservation that was partially booked using points, these programs seem to send the cash portion of your payment back to your account, and the points portion of your payment back to your points balance, thus leaving you right back where you started. The same is true for the travel credit that comes as a benefit on, say, the CIBC Aventura for Business.

Meanwhile, there are data points indicating that the trick works well with Amex and Scotia Rewards. The jury’s still out with RBC Avion and BMO Rewards, so feel free to comment below if you have any data points to contribute.


The refundable hotel trick is useful in many situations that you inevitably face while you’re out there chasing signup bonuses and racking up the points. It allows you to apply for the best cards without hesitating over the minimum spending requirements, and also lets you easily turn your card’s travel credit benefits into cold, hard cash. It’s a great trick to keep handy and ready to be deployed whenever a situation that calls for it arises.

  1. P

    Hey how does this work in regards to Monthly Spends, such as spending $500/month on the Cobalt for 12 months. I’ve already hit the $3k spend to get the 20k MR points but now am trying to make future purchases on more lucrative cards [Aeroplan Reserve for the time being 😉 ]. How does it work, does my annual total have to be $500×12=$6000 if I use the hotel trick for a few months here and there or you think that’s too risky?

  2. Frank

    Hi Ricky, is this trick still applies to AMEX Plat? Haven’t use it yet since the pandemic but my anniversary date is coming up shortly, so want to get the most of the card, thanks.

    1. Ricky YVR

      Yes, it still works with the $200 annual travel credit.

  3. JK

    Refundable hotel trick… what if you transfer points out, and then get your refund… and you fall under your MSR?

  4. KT


    If I make a fully refundable hotel booking with the $200 Amex Travel Credit and need to cancel it, can it be done online or do you have to call in?


  5. Jack

    Does the ‘cash-out’ credit still work for the Platinum card?

    1. Ricky YVR

      As far as I know, yes!

  6. E

    should edit the article to reflect the changes on the travel credit.

  7. Dan

    Hi Ricky,

    I have a questions on the refundable hotel trick. So let’s say I have a credit card with a minimum spend requirement to achieve a bonus. I book a hotel using this method for the minimum spend and then I organically reach the minimum spend over a period of time. When I cancel the hotel at this point and I receive a refund, it will be onto the credit card. So the credit card will be left with a positive balance of the minimum spend requirement. In order to liquidate the refund, I will need to spend the minimum spend requirement again so I will effectively spent double the minimum spend requirement. This is fine if the card has a good earn rate but if I have other cards with better earn rates then I’ll be at a loss. Am I missing something here? I guess you could do a cash withdrawal using the card for the refund amount. You shouldn’t be hit with a cash advance fee given that the card has a positive balance.

  8. FL

    Hi, Does the Refundable hotel trick to extend the accumulation window work on most Canadian credit cards. Any known Exceptions?

    1. Ricky YVR

      No exceptions that I know of.

  9. Jon

    From Amex:

    Please be advised that effective January 1, 2019, we are changing the date when your $200 CAD Annual Travel Credit will be renewed. As of January 1, 2019, the $200 CAD Annual Travel Credit will be renewed each year on the anniversary date of your Platinum Card membership and will be available for use for the 12 months following your anniversary date. It will no longer be renewed based on calendar year. If you have not yet used your 2018 Annual Travel Credit, you will still have until December 31, 2018 to use your 2018 credit. Example: If your next Platinum Card membership anniversary date is April 1, 2019, your next $200 Annual Travel Credit will be available for use from April 1, 2019 to March 31, 2020, and annually thereafter.


    1. Ricky YVR

      Thanks Jon. Yep that’s sad news for sure, although to be fair it was always a pretty obvious loophole that would be plugged sooner or later.

  10. Alex U

    Ricky – Thank you for this article. I am in a very tricky situation at the moment.

    I booked a couple of hotels at a destination where ill be traveling next year, not with the intention of meeting minimum card spending requirements, but with the actual intention of coordinating with my friends. I booked these reservations with a premium tier AMEX card.

    AMEX has somehow issued a VERY LARGE promotional AMEX MR bonus to my reservation.

    Here is where im stuck – i plan on cancelling this card before i travel to this destination. If i cancel this hotel after i have cancelled the card i understand that i will receive a cheque for the refund from AMEX, but how will AMEX claim the points? Will they charge me for it?

    1. Ricky YVR

      I don’t think Amex will try to claim the points if you refund the hotel after the card is cancelled, unless the refund would bring you under the minimum spending threshold (and thus mean that you shouldn’t have gotten the signup bonus). In that case your points might be at risk, so do some extra spending on the card while it’s still open just in case.

  11. Chris

    Hi Ricky,
    Great post! Thanks for taking the time to share the knowledge.
    Question on 3k refund – can you ask for amex to issue a chq refund?

    1. Ricky YVR

      Yes, if your current balance is sitting at a negative amount as a result of a refund, you can get that amount cashed out via cheque.

  12. Nick

    Hi Ricky,

    Thanks very much for this very interesting article. I still have a question pending though… when cancelling the hotel and having the refund processed by Amex, don’t they look at the state of your account let’s say at the end of the 90 days following the approbation and see that the minimum amount spending has not been met?

    Otherwise very great trick I might be using in a near future.

    Thanks a mil for that


  13. Felipe

    Hey Ricky, could you please give more details in regards to doing the hotel trick with CIBC Aventura program? Thanks

  14. Sam

    What happens if you were to get AMEX points by using this hack, immediately transfer them to Aeroplan and then cancel the reservation? Could AMEX actually get the points back? Great post!

    1. Ricky YVR

      I definitely don’t recommend doing that, not least because it’d be an easy way to get flagged by Amex for fraudulent behaviour. There are also data points of Amex issuing invoices to customers who have cancelled cards with negative MR points balances on them.

  15. mainlydana

    Regarding the $200 annual travel credit with Amex Plat, you can really cancel the reservation as soon as the charge posts? That’d be only a matter of weeks. I’d be worried about clawback.

  16. mainlydana

    Regarding the $200 annual travel credit with Amex Plat, you can really cancel the reservation as soon as the charge posts? That’d be only a matter of weeks. I’d be worried about clawback.

    1. Ricky YVR

      Yes, it’s possible. While it’s always prudent to wait a while before cancelling, plans do in fact change all the time, so a cancellation soon after booking isn’t unreasonable.

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