Guide to Understanding Credit Card Points

Q: What is the best way to use credit card points?

The best way to use credit card points is usually by redeeming them for travel. Most rewards cards allow you to transfer points to airline or hotel partners to maximize the value of your points.

Q: How much are credit card points worth?

How much credit card points are worth varies among issuers. Usually, 1 point is equivalent to 1 cent, but credit card issuers may adjust that value at any time.

Q: Do credit cards with point rewards have higher interest rates?

Credit cards with point rewards do not necessarily have higher interest rates. Interest rates are typically based on your credit and other factors. Rewards cards are generally available to those with good or excellent credit, so they may even have lower interest rates.

Q: How are credit card points different from other credit card rewards?

You can redeem credit card points for such things as travel, gift cards, or merchandise. You can maximize your credit card points by making purchases in specific categories to help get the most value out of them.

What Are Credit Card Points? How Do They Work?

Jason SteeleUpdated January 16, 2025

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Credit card points are rewards that cardholders can earn with a rewards credit card. Points can be redeemed for things like airline miles and cash back. Credit card points can offer value, but you need to know how to earn them, the best ways to use them, and how to redeem them when you’re ready.There are different kinds of points, as well as different kinds of rewards credit cards. If you’re wondering “what are credit card points and how do credit card points work?” this guide is for you. Read on to learn more about how to use credit card points.

What Are Credit Card Points?

Credit card points are rewards you can earn for using a credit card. When you make a purchase with a rewards card, you get points, miles, or cash back. The rate at which you earn points depends on the credit card you have. Some cards give you the same number of points for all the spending you do. With others, you earn extra points for purchases in specific categories. Credit card points are one of the benefits of credit cards, so it makes sense to understand how they function.

How Credit Card Points Work

With a rewards credit card, you earn points when you make purchases with your card. Generally, you earn 1 point for every $1 spent, though different credit cards may have different rates. You may get extra points for purchases in specific categories, depending on the card.

Types of Credit Card Points

There are several different kinds of credit card points:

Reward Points

With many of the top rewards credit cards, you earn extra points when you use your card for purchases in certain categories like travel or dining out. For instance, you might earn two points or more for every dollar you spend on dinner at a restaurant.

Airline Miles

Travel credit cards or credit cards that are co-branded with airlines let you earn miles through travel-related purchases. With an airline co-branded credit card, you will generally earn additional miles for flights and purchases made with the airline.

Cash Back

With a card that offers cash-back rewards, you usually earn 1% cash back on all purchases. However, some of the top cash-back credit cards may offer 5% cash back on purchases made in specific categories, such as gas or groceries. You can typically redeem cash-back points for a statement credit, gift cards, or you may be able to put them toward certain online purchases. Recommended: Credit Card Points vs. Cash Back: Understanding the Key Differences

Earning Credit Card Points

Wondering how to get credit card points? There are ways to earn credit card points besides using your card for daily purchases, including:

Referrals

Some credit cards offer bonuses to cardholders who refer new customers to them. Here’s how the process usually works: You refer someone you know through a special link from your credit card issuer. Once the other person signs up and gets approved for the card, you’ll typically get a certain number of points for referring them.

Sign-up Bonuses

With sign-up bonuses, you generally earn a lot of points at once when you open a new card and meet a particular spending minimum within a specified time frame.

Maximize Bonus Category Spending

As mentioned, some credit cards designate certain categories of spending, like travel or dining, for bonus points. If you make purchases in these categories, you could earn additional points. Some credit cards have bonus categories that rotate throughout the year, while others have set categories that always earn additional points.

Redeeming Credit Card Points

Knowing how to redeem credit card points is an important part of understanding how credit cards work. Typically, you can redeem your points by logging into your credit card account online. You then decide what to use your points for. You may be able to put them toward such things as travel, gift cards, or online purchases, depending on your credit card issuer. Typically 1 point is worth 1 cent, but this can vary, depending on the credit card.

Getting the Most Out of Your Credit Card Points

While you can redeem your credit card points in a variety of ways, you’ll usually get the best value by redeeming points for travel. Depending on the card, you might have to book through your credit card issuer to redeem points for travel, or you may be able to redeem points by erasing or wiping travel purchases off your bill later.You could also redeem credit card points for gift cards, statement credits, or through online retailers like Amazon. While these options might not offer the best rate of redemption, they can still save you money.

Are Credit Card Points Worth It?

Determining whether credit card points are worth it generally depends on your spending habits, budget, lifestyle, and how well you can use your points. This is something to consider as you are shopping for and weighing credit cards. It makes sense to choose a card that best suits your spending habits so that you might earn as many points as possible.

Do Credit Card Points Expire?

Depending on the issuer and the type of card that you have, your credit card points could expire. Many regular rewards cards don’t have expiration dates for rewards points. However, if you have an airline or hotel co-branded card, your points and miles may depend on the expiration rules of the airline or hotel. It’s wise to be aware of this policy when choosing a credit card. Check with your card issuer to find out about the expiration policy of your points.

The Takeaway

Credit card points can generally be a good way to get more value from your spending. The better you understand how your credit card points system works, the more you may get out of your points. Read all the information about your account’s credit card points and how they work, and if you have questions, call your card issuer.If you’re shopping for a new rewards credit card, such as a top travel rewards credit card, Lantern can help. In our online marketplace, you can easily compare different types of rewards programs to find the best option for you.

Frequently Asked Questions

What is the best way to use credit card points?

How much are credit card points worth?

Do credit cards with point rewards have higher interest rates?

How are credit card points different from other credit card rewards?

Photo credit: iStock/fizkes

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About the Author

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.

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