Originally Posted by muzthe42nd

If there's a hugely restrictive cancellation policy like that, there's probably also a deposit requirement in place for paid stays.

Since you are on points, the $5 charge is probably a deposit of the $1 a night tax that this hotel charges. This tax should be paid by the points, but due to a system error in the property management system it often shows up as a required deposit to the credit card guaranteeing the reservation. If you cancel, it will be refunded. If you don't, it will be a credit towards your incidental spend or refunded at check out.