Learning how to work with a new credit card points system can be overwhelming. Each program comes with its own set of rules and quirks, making it hard to figure out what’s worth your attention. You’ll find yourself trying to keep track of everything — from identifying which purchases rack up the most points to understanding the best ways to cash them in.
We’ve put this guide together to simplify things. Our goal is to help you get comfortable with the basics of the most popular credit card rewards programs. That way, you can stop stressing over your points and start using them to your advantage. Let’s break down how these systems really work and how you can make the most out of them.
Understanding Credit Card Points
When it comes to credit card rewards, you’ll generally come across three main types: cash back, points, and miles. While credit card points and miles are often handled similarly by issuers, there are a few differences worth noting. With all three reward types, you earn a set amount per dollar spent, but how that reward is structured varies.
Cash-back systems return a percentage of your purchase as a direct dollar value. For example, a card offering 2% cash back would give you 2 cents for every dollar you spend.
Credit card Points and miles work a bit differently. Instead of receiving a cash equivalent, you earn points (or miles) for each dollar spent. For instance, you might earn 2X points on select purchases, meaning two points per dollar spent.
The amount of cash back, miles, or points you earn can change depending on what you’re buying. Some cards give a fixed rate for all purchases, while others offer bonus categories that reward certain types of spending more generously.
For those looking to earn travel rewards, travel-specific credit cards are often the best choice. A high-end travel rewards card might give you 5X points for travel-related expenses — like flights or rideshares — and just 1X point for everything else.
How to Earn More Credit Card Points
We all want to make the most of our credit card rewards. While using your card for everyday purchases is a good start, focusing on bonus categories can really help boost your points. But there are other ways to expand your earning potential, too.
Maximizing Bonus Categories
Many rewards cards reward you with points or miles based on the types of purchases you make. The key here is to understand where you can earn the most. Certain categories — like travel, dining, or groceries — often offer higher rewards rates compared to general purchases.
For example, if you travel a lot, a card like The Platinum Card® from American Express could be a great fit. It offers:
- 5X Membership Rewards points per dollar spent on flights booked directly with airlines or through American Express Travel (up to $500,000 annually).
- 5X points on prepaid hotel bookings made through American Express Travel.
- 2X points on prepaid car rentals via American Express Travel.
- 1X point on all other purchases.
Taking Advantage of Extra Earning Opportunities
Beyond regular spending, many credit cards come with additional ways to earn bonus points. Here’s how we can really take advantage:
- Welcome Bonuses: These are often the easiest way to stack up points. After meeting a certain spending threshold, you can earn big bonuses. For example, the Amex Platinum offers a massive 80,000 points when you spend $8,000 within the first six months.
- Referral Bonuses: If you’re already a cardholder, referring friends or family can earn you points. Usually, after they’re approved for the card, you’ll receive a set amount of points. These bonuses can be substantial, depending on the offer.
- Limited-Time Offers: Credit card issuers often provide special deals to earn extra points with certain retailers. You’ll need to activate these offers, either through your account or the issuer’s shopping portal, and then meet the spending requirements. It’s an easy way to rack up even more points on top of your regular purchases.
Redeeming Credit Card Points: What You Should Know
When it comes to using the rewards you’ve earned with your credit card, there’s no one-size-fits-all approach. Each program is a bit different, but there are a few common options that most issuers provide. Let’s walk through some of the top ways you can redeem your points.
Gift Cards
One of the most flexible ways to use your points is by converting them into gift cards. You can choose from a range of stores or restaurants. It’s convenient, but just keep in mind that gift cards might not always offer the best value compared to other redemption methods.
Charitable Donations
If you’re feeling generous, some credit cards allow you to donate your points to charities or nonprofit organizations. You can typically find this option within your account’s rewards section. This option can be a nice way to give back while getting value out of your points.
Travel Purchases
Using your points for travel-related purchases is often one of the best ways to get value. If you have a travel rewards card, you can redeem your points for flights, hotels, car rentals, and more. Big names like Chase, Capital One, and American Express all provide travel portals for booking. What’s even better? Many premium travel cards let you transfer your points to loyalty programs, which can increase the value of your rewards even further.
Online Retailers
Some credit card issuers allow you to redeem your points directly with online retailers, like Amazon. You’ll redeem your points at checkout, making it quick and easy to use them for everyday shopping. While this can be convenient, keep in mind that it’s often not the most rewarding way to spend your points.
Statement Credits
A straightforward option is using your points for statement credits. This means your points are converted into cash, reducing your credit card balance. Just check if your card issuer offers this redemption method, as not all of them do.
Shopping Portals
If you’re looking to buy something specific, many credit card issuers have their own shopping portals where you can redeem your points. You’ll typically shop through these portals to buy products from partnered retailers. While this is an easy way to use points, the value isn’t always the best.
The Value of Credit Card Points: How Much Are They Really Worth?
Understanding the value of your credit card points isn’t always straightforward—how much they’re worth depends on the rewards program and how you choose to redeem them. On average, most points hold a value of about 1 cent each. However, that value can fluctuate, and some redemption options might offer less than that, especially when you use points for things like gift cards or shopping on platforms like Amazon.
But there’s good news! You can often get more than 1 cent per point if you pick the right redemption method. Take the Chase Sapphire Preferred® Card, for example. If you earn the 60,000-point bonus by spending $4,000 in the first three months, those points are worth $600 when redeemed as cash.
However, by redeeming them through the Chase Travel portal, you can boost their value by 25%, meaning your 60,000 points could end up worth $750. Even more exciting, you can transfer those points to one of Chase’s travel partners, giving them an average value of about $1,200.
To make sure you’re getting the most out of your points, it’s crucial to read the fine print of your credit card’s rewards program. Keep an eye on how point values shift depending on the redemption method. That way, you can maximize your points, ensuring every dollar you spend earns you as much as possible.
How to Calculate the Value of Your Credit Card Points
When it comes to figuring out how much your credit card points are worth, the math is often quite simple. All you need to do is divide the dollar value of the reward by the number of points required to redeem it. For instance, if a flight costs $300 and can be redeemed for 15,000 points, you’re getting a solid 2 cents per point, which is a good deal.
In many cases, the best value for your points comes when you transfer them to airline or hotel partners. These transfers often unlock greater rewards and enhance the overall value of your points.
To give you an idea of how different rewards programs stack up, here are the latest point valuations from Bankrate for some of the top credit card rewards programs:
| Credit Card Rewards Program | Bank Rate Point Value |
| American Express Membership Rewards | 2.0 cents |
| Bank of America Travel Rewards | 1.0 cents |
| Bilt Rewards | 2.1 cents |
| Capital One Miles | 1.7 cents |
| Chase Ultimate Rewards | 1.0 to 2.0 cents (varies by card) |
| Citi ThankYou Points | 1.0 to 1.6 cents (varies by card) |
| Discover Miles | 1.0 cents |
| U.S. Bank FlexPerks | 1.5 cents |
| Wells Fargo Rewards | 1.0 cents |
The Final Word on Credit Card Points
The way you earn, redeem, and value your points depends entirely on the credit card you have. That’s why it’s crucial to think strategically when it comes to redeeming your rewards. If you find that your points hold more value when cashed out rather than being used for gift cards, then go for cash back—why settle for less?
Similarly, if your points shine brightest when redeemed for travel, it might be wise to hold off and save up for your next vacation. The more you familiarize yourself with how these systems operate, the better you’ll be at using your points to their fullest potential. This knowledge will allow you to take full advantage of the best rewards cards available.
