Rewards credit cards can significantly enhance your wallet, especially when you earn points or miles on your everyday purchases. A recent survey from Slickdeals in 2021 revealed that credit card holders saved an average of $757 annually using their rewards. It’s crucial to note that the value of these points or miles can vary greatly across different credit cards. To maximize these benefits, selecting one of the best rewards credit cards and employing your rewards strategically is key. Here’s what you need to know.

Key Takeaways

• Redemption values for credit card miles and points vary significantly based on the card.
• Points and miles are typically more valuable when redeemed for travel as opposed to cash, gift cards, or shopping.
• Specific co-branded airline and hotel loyalty cards may offer better redemption values compared to general travel rewards cards, but they may also restrict how you can utilize your rewards.
• Some cards enable the transfer of points or miles to other travel partners, providing you with increased flexibility in utilizing your rewards.

Earning rewards points can serve as a compelling incentive to opt for plastic over cash. A survey by Ipsos revealed that 53% of Americans are more inclined to use their cards due to points and rewards, with 49% willing to switch cards for higher rewards potential.

Rewards credit cards offer various mechanisms for earning points. Some feature a flat rewards rate where a set number of points are earned per dollar spent, while others employ tiered rewards structures, with certain purchases yielding more points per dollar.

Cards also offer avenues to earn additional points through welcome bonuses, anniversary bonuses, and referral bonuses, typically contingent on meeting specific requirements. For example, you could earn 100,000 bonus points for spending $3,000 on purchases within the initial three months.

Credit card points are usually valued at around 1 cent each, but the actual value can vary based on the redemption method and your card of choice. Redemption options may include travel, statement credits, paying off past purchases, cash deposits, checks, shopping, gift cards, or donations. Some cards even allow points to be used for mortgage, car loan, or student loan payments if the card and the loans are from the same issuer.

Hotel Cards vs. General Travel Cards

When comparing points redemption values, it’s crucial to differentiate between hotel credit cards tied to major hotel brands’ loyalty programs and general travel rewards cards offered by banks. Here are the average points values from top card issuers, based on calculations by Investopedia.

Earning miles through a rewards card appeals to travelers looking to leverage rewards for plane tickets. While miles are commonly associated with co-branded airline rewards cards, there are other travel rewards options that allow mileage accumulation without booking a specific airline.

Choosing between a co-branded airline card and one offering miles on all purchases depends on your spending habits and travel preferences. For instance, sticking with Delta for flights might favor a travel card that rewards you with additional miles on Delta bookings, while non-airline loyal customers may find cards offering double miles on all purchases more suitable.

Airline miles are generally valued at 1 cent each. However, the actual value can vary based on your card and redemption method. While primary redemption options include plane tickets, you may also redeem miles for hotels, rental cars, other travel expenses, cash, gift cards, or shopping. Additionally, miles can sometimes be transferred to other airlines, hotel partners, or rail travel partners, though the swap may not be on a 1:1 basis.

Which Is Better: Points or Miles?

Miles generally offer a higher redemption value compared to points. Within the points category, hotel rewards tend to be more valuable than general travel rewards cards. Therefore, understanding this hierarchy is essential when selecting the most advantageous rewards option.

The choice between points and miles should align with your travel plans, payment behaviors, and annual fees associated with your card. For instance, road trip enthusiasts may benefit more from a hotel rewards card, while frequent flyers could maximize rewards with miles cards. Conducting a review of your past purchase patterns can help estimate potential rewards earnings, factoring in the redemption values discussed above.

How to Choose a Travel Rewards Card

In choosing a travel rewards card, considering whether you prefer points or miles is just the beginning. Evaluating reward program structures, introductory bonuses, redemption options, expiration dates, card benefits, annual fees, foreign transaction fees, and APR can assist in identifying the best card for your needs. It’s also possible to hold multiple travel rewards cards to optimize rewards potential, provided the annual fees are justified by the benefits received.

Credit Card Points and Miles FAQ:

Here are some commonly asked questions and answers regarding credit card points and miles:

What Is a Travel Mile?

A travel mile can be earned by making purchases with a travel rewards credit card or through an airline’s frequent flyer program. Travel miles are redeemable for airfare and other travel expenses, with their value varying based on the specific program.

What Are Travel Miles and Points Worth?

Typically valued at 1 cent each, travel miles and points can differ in worth based on the card and redemption method. Their value could be higher or lower than 1 cent, depending on these factors.

How Can I Use Travel Points?

Travel points offer various usage options, such as paying for flights, hotels, rental cars, cruises, vacations, cash, or shopping, depending on the card’s features.

What Is the Best Way to Use Credit Card Points?

The optimal usage of credit card points involves selecting the option that provides the most value, which is often related to travel redemptions like flights or hotels, rather than cash or other lower-value options.