Learning a credit card points system can be tricky. Between remembering which purchases earn the most points and researching the most valuable redemption options, there’s a lot to keep track of. Every rewards program is different, but here’s how credit card points generally work.

What are credit card points?

There are three types of credit card rewards:

With each type of card, you’re earning rewards at a set rate per dollar you spend. In the same way that cash back rewards you with dollars (2 cents back for every dollar spent, for example), credit card point systems give you points for your spending (2 points per dollar spent, for example).

The rate of points you earn may differ depending on the type of purchase you make. Some credit card issuers have a fixed rate for all purchases, 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 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

Every rewards program is different, but most give you several options for redeeming your rewards. Here are some of the most common.

  • 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 airline or hotel loyalty programs.
  • Shopping portals. Some issuers offer their own shopping portals where you can redeem points for merchandise from their 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 seems like a convenient way to use your rewards, it may not be the most lucrative, as issuer restrictions can come into play.
  • Gift cards. Issuers may offer various gift card options, including everything from entertainment to restaurants. Be aware that gift card redemption generally won’t give you the best value on your points.
  • 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 on to the redemption portal of the website.

Want to learn more about all the best redemption strategies? Read our full guide to redeeming credit card rewards.

How much are credit card points worth?

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

Bankrate 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: Bankrate’s Credit Card Points and Miles Valuations
American Express Membership Rewards 2.1
Bank of America Travel Rewards 1.0
Capital One Rewards 2
Chase Ultimate Rewards 1.0 (2.0 for the Chase Sapphire Reserve)
Citi ThankYou Points 1
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.

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.