All You Need to Know About Credit Card Points
March 31, 2020
Credit card points are a great way to use your everyday spending to enjoy life even more. Depending on the card you choose, you can earn points that let you buy anything from airline tickets to hotel stays, gift cards and much more. Here’s what you need to know about credit card points so you can leverage them in ways that best fit your lifestyle.
What are credit card points used for?
Credit card issuers often offer rewards for using their credit cards. These rewards most often come in the form of cash back, miles or points – depending on the type of card you have. Credit card points are a currency of sorts, allowing you to purchase all sorts of different things depending on the structure of your card’s rewards program.
Chase’s Ultimate Rewards points are a great example of how you can typically use credit card points. Through Chase’s website, you can redeem your points for cash back, travel, gift cards to various retailers and purchases through Amazon and Apple. You can also transfer them to one of Chase’s partner rewards programs like Marriott Bonvoy and United MileagePlus.
You’ll find that each rewards program lets you redeem your credit card points in different ways. Make sure you can redeem points in places that you normally shop so your points have the most value for you. When checking out rewards programs, look at transfer partners, the cash back value of each point and the retailers that accept those specific credit card points.
The difference between points and miles
Points and miles are essentially the same — both are rewards you earn for purchases, either through a rewards credit card or a specific loyalty program. The biggest difference between the two is in the types of purchases and credit cards that earn them.
Points tend to be more general. You earn them from your credit card company as a reward for using the card. Each rewards credit card values its rewards categories differently, so you can use this to earn even more rewards by choosing a card that reflects your spending habits or pairing multiple cards to earn bonus points in several categories. The American Express® Gold Card, for instance, offers 4x Membership Rewards points on purchases at restaurants around the world, while the Chase Sapphire Preferred earns 5x points on Lyft purchases through March 2022.
Miles are usually associated with a specific airline or hotel’s loyalty program. They can be used for free flights and upgrades on airlines or free nights at hotels. Many loyalty programs also offer elite status based on either the number of miles you earn or the number of times you fly on a specific airline or stay at a specific hotel chain.
The term “miles” is a bit of a misnomer since the rewards you earn aren’t (usually) tied to the number of miles you travel. Instead, you’ll earn points based on either the cash price you pay for reservations through a loyalty program or your regular spending on a co-branded credit card. Cards like the Delta SkyMiles® Gold Card from American Express and the United Explorer Card earn miles for their respective frequent flyer programs based on how much you spend on your card. While you’ll earn more miles for using these cards for purchases with either Delta or United, you can also earn miles at the grocery store, gas station and everything else you buy on a daily basis.
How to earn points
Earning points with a rewards credit card is simple — use your card for your normal purchases. With most rewards credit cards, you’ll earn at least one point for every dollar you spend and bonus points when you make purchases in certain categories like travel, restaurants or supermarkets.
You should always check out a credit card’s rewards program before you sign up for it so you can make sure it will work well for you. First, consider the type of points it earns. Are they attached to a certain company like the Uber Credit Card, or can they be transferred to travel partners like the Venture Rewards card from Capital One?
Next, look at the rewards rates. Do you spend in the categories that earn the most points on that card? If not, you should find a card that rewards you for your spending habits.
Finally, check out the sign up bonus. Most rewards credit cards offer a bonus reward if you spend a certain amount within a limited time after opening your account. Make sure your spending habits let you earn the sign up bonus while still paying off your balance in full every month. These three steps will help you maximize the points you earn from your rewards credit card and use them to best fit your lifestyle.
Redeeming and transferring points
You can redeem most credit card points in one of four ways: cash back, gift cards and merchandise, transfers or travel. To choose how to redeem your points, go to your credit card’s rewards page and select the appropriate options. Some card issuers even allow you to pay with points when you make purchases at certain retailers like Amazon. Check the terms of your specific card to see if that option is available for you.
When you compare the different ways to redeem, you’ll find that your points are worth more with certain redemptions than others. Programs like Chase Ultimate Rewards give you a dollar for every hundred points you redeem for cash back, while Citi ThankYou® Rewards are only worth $0.50 for every hundred points when redeemed for a statement credit. For most rewards programs, travel and transfers will have the best value because you can take advantage of rewards pricing on a travel partner’s loyalty program.
In a nutshell
Whether you’re planning your next vacation, prepping for a weekend getaway or saving for a big purchase, credit card points can help you get there. Perfect for people with complex lives — that’s everyone, right? — points are flexible and transferrable, which makes them valuable for you to have on hand.
Earning credit card points is as easy as comparing cards that pique your interest, applying for the one that best fits your spending habits and using it for all of your purchases. Once you stockpile your points, you’ll find all kinds of great uses for them, from your next cup of coffee to a new adventure and everything in between.