Guide To Understanding Credit Card Miles

Credit card miles could potentially save you money on travel. They may help you pay for all or part of a trip, and they might be a great credit card perk. However, if you’ve never used them, you might be wondering, “How do credit card miles work?” Read on to learn how to use and take advantage of credit card miles.

What Are Credit Card Miles?

Credit card miles are a type of rewards currency or benefit that you earn for spending money with certain credit cards. The more you spend on one of these credit cards, the more miles you might earn. Once you’ve accumulated enough miles, you may redeem them.

Some credit cards let you earn bonus miles for certain types of purchases, such as hotels or airfares. You may redeem credit card miles for travel-related expenses as a credit on your statement or transfer them to hotel or airline partners, depending on the credit card.

How Do Credit Card Miles Work?

How do miles work on credit cards? When you use a credit card that earns miles, you earn those miles as a percentage of your spending on the card. The rate of miles earned per dollar varies by credit card. With many major travel rewards cards, you may earn at least one mile per dollar spent. Some credit cards allow you to earn more for certain types of purchases.

On average, each airline mile is worth about 1 cent. The value may be higher or lower, depending on the card. Each credit card rewards program also has different ways to redeem miles, which might also affect their value.

What Types of Credit Cards Earn Miles?

There are two types of credit cards that earn miles: co-branded airline credit cards and general travel credit cards.

Some credit cards are co-branded with airlines. With a co-branded credit card, you earn extra or bonus miles on purchases made with that airline. Miles earned with these credit cards may typically only be used for travel with that particular airline. Co-branded airline cards may also give you additional perks, such as priority seating or free checked bags.

General travel credit cards typically allow you to earn miles for any purchases made with them. When using a credit card like this, you may later redeem the miles for a variety of travel expenses, including flights, hotels, transportation, or even tours. Some of the top travel credit cards have a variety of partners, including different airlines so that you may convert your credit card miles into airline miles. If you make travel-related purchases with one of these cards, you may earn extra points.

Tips for Earning Credit Card Miles

One of the benefits of credit cards is earning miles, and there are a variety of ways to do it. While many credit cards require you to spend money, there are other ways to earn credit card miles as well. Here are some top tips for earning credit card miles.

Get the Right Card for You

An important tip for earning miles with a credit card is to get a card that fits your needs, spending habits, and criteria. For instance, don’t get a co-branded airline card if you rarely fly that airline. 

If you don’t have loyalty to a particular airline or hotel, it might make sense to get a general travel credit card. If you like to travel in style and enjoy perks, you might want to consider one of the top rewards credit cards. 

Refer Friends

Some credit cards offer referral bonuses if you get a friend or family member to apply for the card. Usually, the way referral bonuses work is that you refer a friend or relative to the credit card via a special link from your card issuer. Once the other person has signed up and been approved for the card, you may receive a certain amount of miles for the referral.  

Look for Sign-up Bonuses

Sign-up bonuses are popular incentives to get people to apply for a new credit card. Typically, applying for a credit card with a sign-up bonus allows a new card owner to earn a large number of miles at once. 

To qualify for the sign-up bonus, you usually have to meet a specific spending minimum within a certain time frame after getting the card. Of course, try not to overspend or stretch your budget just to earn a sign-up bonus. 

Maximize Bonus Category Spending

Some credit cards have certain categories of spending, such as travel or dining, that reward you with bonus points. When you use the credit card to make purchases in these bonus categories, you may earn additional points beyond the typical one point per $1 of spending.

Take Advantage of Everyday Spending

Make sure you are using the right credit card for each transaction. Some of the top credit cards may help you do that. For example, if you are buying a flight, you may want to put that expense on a co-branded airline credit card or a card that earns extra miles for travel. 

Recommended: How to Choose a Credit Card 

Tips for Redeeming Your Credit Card Miles

Like redeeming credit card rewards, redeeming credit card miles may be different depending on the credit card and the program. Here are some strategies that may help you optimize your miles.

Be Flexible

When traveling, if you have flexibility with your travel dates, you may often identify cheaper flights that could cost you fewer miles. This makes your miles go farther. 

Book in Advance

Booking flights at the last minute is often more expensive than booking them months in advance. Looking into flights ahead of time means it’s more likely that you may choose one that requires fewer miles. 

Check Out Travel Partners

Some airlines have other airlines that they partner with. You may be able to redeem miles with an airline partner with lower-cost tickets. 

Look Into Transfer Partners

If you can, choose a credit card that earns transferable miles, which means you may transfer your credit card miles to a variety of airline or hotel partners. That way, instead of being limited to one airline or hotel, you could have a number of different ones to choose from, so you may identify the right option at the right price. 

Do Your Research

It’s always important to explore the options and do your research before redeeming any credit card miles. Make sure you are getting strong value for your miles and identifying a competitive price for your trip. 

Recommended: Credit Card Points vs. Cash Back: Understanding the Key Differences

Credit Card Miles vs Frequent Flyer Miles

Although they sound similar, credit card miles and frequent flyer miles are different. Frequent flyer miles are miles that you earn toward free flights with an airline or its participating partners. Here are the key differences between the two:

The Takeaway

To make good use of your credit card miles, you need a solid strategy. Start by choosing a card that fits your spending habits, whether it's co-branded for an airline you use frequently or a flexible general travel card. Maximize your earnings by looking for sign-up bonuses and consistently using the right card for everyday and bonus-category purchases. When it’s time to redeem your miles, remember to be flexible with your travel dates, book well in advance, and always check out transfer and travel partners. Being smart about how you earn and spend may ensure your miles go farther and help you save money on your next trip.

Credit card miles could potentially save you a lot of money on travel costs. Typically, the more money you spend with a credit card with miles, the more miles you’re likely to earn and be able to redeem for travel.

If you are thinking about applying for a credit card that earns miles, Lantern by SoFi can help. With Lantern you can quickly and easily compare rates and terms to find the best option for you.