A beginner’s guide to credit card points
Key takeaways
- Credit card points are a type of rewards currency that can be earned in exchange for eligible credit card spending.
- To earn boosted points on your credit card, you’ll need to maximize bonus category spending, earn any available welcome bonus and take advantage of promotional offers.
- To get the most value from your points, redeem them for high-value options like travel or points transfers to airline and hotel partners.
It can be challenging to learn a new credit card points system, especially considering how different they can all be from each other. After all, there are a lot of details to keep track of — from which types of purchases earn the most points to which redemption options are the most valuable.
In this guide, we make it easy to understand the basics behind the best credit card rewards programs. That way, you can stop stressing about your points and start using them effectively. Here’s what to know about credit card points and how they work.
What are credit card points?
Generally speaking, cash back, points and miles are the three main types of credit card rewards you’ll find when comparing credit cards — although points and miles are treated pretty similarly by card issuers. With each type of reward, you earn at a set rate for every dollar you spend.
Cash back systems offer you a percentage of your purchase back in dollars. For example, a 2 percent cash back card would award you 2 cents back per dollar spent.
When it comes to points and miles systems, you are rewarded for your spending in the form of points (or miles) instead of dollars. So you might earn 2X points per dollar on select spending, for example.
The rate of cash back, miles or points you earn may differ depending on the type of purchase you make. Some credit card issuers extend a fixed rate for all purchases, while others offer higher rates for specific types of purchases within “bonus categories.”
Among rewards cards, travel credit cards tend to offer more points (or miles) for travel-related spending. A top travel rewards card might offer 5X points per dollar spent on eligible travel-related purchases — such as flights or rideshares — and 1X points per dollar on all other purchases.
How to earn credit card points
In addition to using your credit card for daily purchases, especially in bonus categories, there are a few things you can do to expand your earning potential.
Maximize bonus category spending
With most points and miles rewards cards, you earn points or miles by making specific purchases using your card. Issuers typically offer different earnings rates for different types of purchases. So you might be able to earn more points per dollar on travel, dining or groceries compared to what you would earn on purchases in non-bonus categories.
For example, if you’re an avid traveler and spend a significant amount on flights and hotel rooms, The Platinum Card® from American Express could be a good choice for you. It offers:
- 5X Membership Rewards points per dollar spent on flights booked directly with airlines or through American Express Travel on up to $500,000 per calendar year
- 5X points on prepaid hotels booked through American Express Travel
- 2X points on prepaid car rentals through American Express Travel
- 1X points on all other purchases
By focusing your purchases with this card on flights and hotels, you’ll earn a lot more points than if you just used this card for everyday spending.
Leverage bonus offers
Many credit card issuers offer a variety of ways to earn additional points on their cards. Those options may include:
- Welcome bonuses: Also called sign-up bonuses, these can be earned by meeting certain spending minimums within the first few months of opening the cards. For instance, the Amex Platinum offers new cardholders a welcome bonus of 80,000 points after spending $8,000 within the first six months of account opening.
- Referral bonuses: These bonuses are for current cardholders who get a friend or relative to apply for the card. Generally, you’ll refer a friend through a link and receive a certain amount of points for the referral. The number of points depends on the issuer’s specific referral bonus, but it can be a substantial amount.
- Limited-time-offer programs: Programs like Amex Offers allow you to earn more points on spending with specific retailers. To earn these offers, you can either go through your issuer’s branded shopping portal or log in to your account and activate any offers that you’re interested in. Then, you just simply have to meet the terms of the offer.
How to redeem credit card points
Every credit card rewards program is different, but most programs offer several common options for redeeming your rewards. Those options typically include:
- Statement credits: With a statement credit, the issuer deposits the cash value of the redeemed points directly into your account balance. Not every issuer offers this option, so if that’s how you plan to redeem your rewards, make sure this perk is available to you before applying.
- Travel purchases: With a travel rewards card, you can usually redeem your points for flights or hotel rooms through the issuer’s travel portal. American Express, Chase and Capital One all offer such travel portals. Most premium travel credit cards let you transfer your rewards to airline or hotel loyalty programs, which can provide you with even more value for your points.
- Shopping portals: Most issuers offer their own shopping portals through which you can redeem points for merchandise from partner retailers.
- Online retailers: Some issuers allow you to redeem your points directly with online retailers, like Amazon. This is different from shopping portals because you generally redeem at checkout with the merchant rather than through an issuer’s shopping portal. While this can be a convenient way to use your rewards, it’s usually not the most lucrative.
- Gift cards: Issuers may offer various gift card options, including major department stores, restaurants and more. Be aware that redeeming for gift cards generally won’t give you the best value for your points.
- Charitable donations: Select issuers allow you to donate your points to a charity or a nonprofit organization. You can check if your issuer provides this option by logging in to your account and viewing your redemption options.
How much are credit card points worth?
Credit card points can have different values — it all depends on how an issuer’s points system works and how you redeem them. You’ll usually get about 1 cent in value per point, although credit card issuers may adjust that value at any time. Some options, like redeeming for gift cards or shopping with points on Amazon, may provide less than 1 cent in value.
With that said, you may be able to get more than 1 cent in value for specific redemption options. Here’s an example:
If you earn the 60,000-point welcome bonus on the Chase Sapphire Preferred® Card (by spending $4,000 in the first three months), those points have a base value of $600 (at 1 cent per point). However, you can increase the value of your points with this card by 25 percent if you redeem them for travel through the Chase Travel℠ portal. That means that your 60,000 points could be worth as much as $750 (at 1.25 cents per point). Even better, you can transfer them to a high-value travel partner for an average value of about $1,200 (at 2.0 cents per point).
Read your credit card’s fine print to learn how much your points are worth, and pay attention to whether point values go up or down depending on how you redeem them. That way you can get the most out of every point you earn and every dollar you spend.
Bankrate’s take: At the end of the day, a point’s true value is up to you. Points have “monetary” value and “experiential” value. For example, if you were looking to book a cruise and found your points would only be worth 0.8 cents apiece, then your monetary value may not be very high. But if you still took the trip that you wouldn’t have otherwise taken, then that’s highly beneficial to you in a different way and still provides excellent experiential value.
How to calculate points values
Determining your points value with a certain redemption option often takes some quick division: Divide the dollar value of a booking by how many points you’d need to redeem for it.
For example, let’s say a round-trip flight from Cincinnati to New York on Delta Air Lines — a high-value transfer partner for those with American Express travel cards — is available for $215 for Basic Economy. It also goes for 9,300 miles. Your point redemption value would be 2.3 cents per point if you went for the miles option — or a great deal!
Sometimes, though, you can’t always get the best deal and may still have to redeem your points when needed.
On my recent trip to Australia, I was able to get over 14 cents per point in value on my flights with Membership Rewards. However, needs can sometimes dictate otherwise. When my son's tuition bill for the year hit, I needed extra cash, so I cashed out a bunch of Membership Rewards points for 1.1 cents each.— Ryan Flanigan, Bankrate Credit Cards Writer
Baseline value vs. potential value
Points can be exciting to redeem, since you can often work to earn more bang for your buck. Issuers have pretty clear measures for how much their points are worth, but the best savvy redeemers can stretch their points even further.
For example, Chase notes that Ultimate Rewards points earned with the Chase Sapphire Preferred can be worth up to 1.5 cents each — their “baseline” value — but according to Bankrate’s latest valuations, transferring those points to a high-value transfer partner can boost the points’ worth to 2.0 cents on average.
Here are Bankrate’s latest points and miles valuations for some of the most popular credit card rewards programs.
| Credit card rewards program | Baseline value | Bankrate point value |
| American Express Membership Rewards | 1 cent | 2.0 cents |
| Bank of America travel rewards | 1 cent | 1.0 cents |
| Bilt Rewards | 1.25 cents | 2.1 cents |
| Capital One miles | 1 cent | 1.7 cents |
| Chase Ultimate Rewards | 1 cent to 1.5 cents (depending on the card) | 1.0 cents to 2.0 cents (depending on the card) |
| Citi ThankYou Points | 1 cent | 1.0 cents to 1.6 cents (depending on the card) |
| Discover Miles | 1 cent | 1.0 cents |
| U.S. Bank FlexPerks | 1.5 cents | 1.5 cents |
| Wells Fargo Rewards | 1 cent | 1.0 cents |
The bottom line
Your earnings structure, redemption options and points value will vary based on the card you’re using. That’s why you need to be strategic about how you redeem your credit card points. If your points are worth more as cash back than they would be if you redeemed them for gift cards, why not choose cash back?
Likewise, if the value of your points increase when you redeem them for travel purchases, it makes sense to save up your points for your next big trip. The better you understand how credit card points systems work, the more you’ll get out of your rewards — putting you in a position to leverage the top rewards credit cards on the market. With a little practice, you’ll be able to fully maximize your credit card rewards.
Frequently asked questions about credit card points
