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A beginner’s guide to credit card points

woman working on computer and looking at credit card
nenetus/Adobe Stock
woman working on computer and looking at credit card
nenetus/Adobe Stock
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So you have a credit card that earns points, and you’re ready to start earning rewards on your purchases. Or maybe you’re considering applying for a card that earns reward points. You may be wondering how rewards points work, and how can you get the best value from your redemptions. Earning and redeeming rewards is easy once you know how point systems work.

What are credit card points?

Credit card points are one of three main types of credit card rewards:

With each type of card, you’re earning rewards at a set rate per dollar you spend. With cash back, you earn dollars (2 cents back for every dollar spent, for example). Credit card point systems give you points instead of dollars for your spending (2 points per dollar spent, for example).

Bankrate Insight
Though credit card points are more complex than cash back, the redemption value is often higher.

The rate of points you earn may differ depending on the type of purchase you make. Some credit card issuers have a fixed points system, in which you always earn the same rate of points, while others reward certain purchases or “bonus categories” more than others.

For example, travel credit cards tend to offer more points or miles per dollar for travel-related spending. A top travel rewards card might offer 5 points per dollar (5X) spent on travel-related purchases (such as flights or Uber purchases) and 1 point per dollar on all other purchases.

How do you earn credit card points?

When it comes to earning points, there are a few things you can do to expand your earning potential besides using your credit card for daily purchases. Here are some examples.

Maximize bonus category spending

In most cases, you earn credit card points by making specific purchases using your card. Many issuers offer different point rates for certain types of purchases. For example, if you’re an avid traveler and spend a significant amount on tickets and hotel rooms, the The Platinum Card® from American Express offers 5X Membership Rewards points per dollar spent for flights booked directly with airlines or with American Express Travel (up to $500,000 on these purchases per calendar year). Prepaid hotels booked with American Express Travel also earn 5X Membership Rewards points.

Sign-up bonuses

Many credit card issuers offer a sign-up bonus that allows you to earn a large number of points at once. Typically, you have to meet a certain spending minimum within the first few months of opening the card before you can claim the bonus, so be sure that works with your budget before signing up.


Some issuers offer referral bonuses to current cardholders who get a friend or relative to apply for the card. Generally, you’ll refer a friend via a link and receive a certain amount of points for the referral. The number of points will depend on the issuer’s specific bonus.

Redeeming credit card points

You can redeem rewards points for everything from statement credits to online shopping. Some credit cards may give you the option to redeem through their mobile app, or you may be able to use the issuer’s portal.

If you have an Amex card that earns American Express Membership Rewards, for example, you can redeem your points by logging into your card account or by visiting the Membership Rewards portal. From there, you can book or upgrade travel, use points to cover credit card purchases and transfer your points to participating travel loyalty programs, as well take advantage of other convenient features.

Rewards credit cards may let you redeem points for any or all of the following:

Best ways to redeem

Statement credits: With a statement credit, the issuer will deposit the cash value of the redeemed rewards points directly into your account balance. Not every issuer offers this option, so if that’s how you plan to redeem your rewards, be sure this perk is available to you before applying.

Travel purchases: With a travel rewards card, you can usually redeem your rewards for flights or hotel rooms through the issuer’s travel portal. American Express, Chase, and Capital One all have such travel portals. It’s also common for credit cards to let you transfer your rewards to travel loyalty programs, which means you could turn your credit card points into hotel points or airline miles. Each credit card issuer has its own set of partner brands, which will affect your transfer options. See our credit card transfer partner guides to compare:

Alternative redemption options

Using credit card points for statement credits or travel are usually the most lucrative redemption options, but some situations may call for another method. Here are other good uses for your points:

Gift cards: Gift cards are a common way to redeem your rewards. You can choose from a slew of options, including everything from entertainment to restaurants. Issuers may offer various gift card options, so if you have multiple cards from different issuers, you may have multiple stores or brands from which to choose. Be aware that gift card redemption generally won’t give you the best value on your points.

Online retailers: Some issuers allow you to redeem your points with online retailers, like Amazon. While this seems like a convenient way to use your rewards, it may not be the most lucrative, as issuer restrictions can come into play.

Charitable donations: Select issuers will allow you to donate your points to a charity or a nonprofit organization. You can check if your issuer provides this option by logging onto the redemption portal of the website.

How much are credit card points worth?

Credit card points have different values depending on the issuer’s points system and the way you redeem them. One point is often equivalent to one penny, though credit card issuers may adjust that value at any time.

The Points Guy tracks average values for a variety of credit card rewards programs. Here are valuations for the most popular credit card rewards programs:

Credit card rewards program Point value (cents per point)
*Source: The Points Guy Monthly Point Valuations
American Express Membership Rewards 2.0
Bank of America Premium Rewards 1.0
Capital One Rewards 1.7
Chase Ultimate Rewards 2.0
Citi ThankYou Points 1.7
Discover Rewards 1.0

Your point value might also change depending on the way you use your points. If you earned the 60,000-point sign-up bonus on the Chase Sapphire Preferred® Card (by spending $4,000 in the first three months), for example, those points would have a base value of $800. However, you can increase the value of your Chase Sapphire Preferred points by 25 percent if you redeem them for travel through Chase Ultimate Rewards, which means that your 60,000 points could be worth as much as $750.

How to calculate point value
Determining your points’ value with a certain redemption option only takes some quick division:

Dollar value of reward / points needed to redeem it = point value

For example, if you purchase a $300 flight with 15,000 points, your points are worth 2 cents apiece—a great deal!

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 they are redeemed.

Do credit card points expire?

Depending on the issuer and the type of card that you have, your hard-earned points could expire. Typically, if you have a regular rewards card and not a branded travel card, your points are less likely to have an expiration date, as most of the major issuers have no-expiration policies. If you have an airline or hotel card, however, your points and miles usually expire within the issuer’s timeline.

Be sure to check with your card issuer to keep up with the potential expiration dates so you don’t miss out on redeeming your points for valuable upgrades, perks and other opportunities.

The bottom line

Your redemption options, earning structure and point value will vary based on the card you’re using. In any case, 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 your point value increases when you redeem for travel purchases, it makes sense to save up your points for your next big trip. The better you understand how your credit card points system works, the more you’ll get out of your rewards. With a little practice, you’ll begin to maximize your credit card rewards.

Written by
Hanneh Bareham
Student loans reporter
Hanneh Bareham specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand.
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Part of  Introduction to Rewards Credit Cards