There are over a thousand credit cards on the market today. Many of them are considered as reward cards offering points, miles or cashback for a wide variety of categories.
You can maximize your spending if you use a certain card to buy groceries during the winter, or use a different card to pay for gas when traveling in the summer. The more cards you have and the more diversified your spending is, the more difficult it can be. “Who has time to figure all this out?” You may wonder. Is it really worth it?
Not everyone aspires to be a points connoisseur by flying free to Australia and redeeming points for hotel upgrades while you’re there. However, you can make your current credit card perform better with a little effort. Or maybe you can find a new card to help you get closer to your goals, whether it’s saving money or traveling for less.
Read on to find out everything you need to know about credit card scores and how to make them work for you.
What are credit card points?
Think of credit card points as a loyalty program designed to reward you for doing business with a particular merchant. The merchant is the card issuer only in this case.
“Points are an incentive to use a credit card,” says Kiara Martin, author of the Credit With Kiara blog.
If you have a credit card that gives you points for spending, you will earn points every time you use that credit card for a purchase. The number of points you earn depends on the card.
While some cards offer cashback or miles instead of points, they can often be used in the same way as points.
How are points calculated?
Generally speaking, you should earn at least one point for every dollar spent. But cards tend to differ in that they offer more points for certain types of spending. Here are some examples:
Expert Tips for Earning Credit Card Points
If you have a credit card that rewards you for spending money, you will earn points every time you use it. But if you are a strategic person, you can accumulate points faster. You can do this in a variety of ways, including the following:
Use the right card for the right purchases
If you’re going to order dinner at Postmates, charge it off the card, which gives you extra points for shopping at the restaurant. This may not be the same card that offers bonus points this fall at home improvement stores. However, another card may refund you extra money at the gas station.
You don’t need—in fact, you probably shouldn’t, if you’re careful about your finances—to have a card for every category. But if you have more than one card, pay attention to the specific rewards associated with each and use them accordingly.
Be aware of enhanced repayment options
Some issuers increase the value of your points if you use them in certain ways, often through the issuer’s own portal and usually for travel. For example, the Chase Sapphire Preferred Card offers cardholders 25% more on their points when they redeem them for travel purchases through Chase Ultimate Rewards (thus earning 60,000 points after you spend $4,000 in the first three months, what usually costs $600 costs $750). while traveling through Chase’s portal).
Use signup bonuses
Many bonus cards offer bonus points for minimal spending in the first few months of card ownership. If you use these bonuses strategically, you can earn big rewards for purchases you were already about to make.
“I am always waiting [to get a new credit card] until I have a big purchase planned,” says JJ Haglund, a travel blogger with a family of six who pays for most of their travel with points.
He purchased his latest credit card right before he bought a backyard playset for his kids, and the big spend took care of the bonus requirements. However, he says, “I only use my credit cards for things that I would buy anyway.”
Don’t forget about referrals
Issuers want you to spread the word about their cards and referral rewards by offering cash or points bonuses. Typically, you can earn up to $500 cash or up to 100,000 points by making the most of your issuer’s refer-a-friend options.
“I love referrals,” says Haglund. He recently saw that one of his airline credit cards was offering a significant referral bonus. He posted a link to the card on his blog and received several referrals from it — enough, he says, to pay for a couple of free flights with the airline.
What can you do with credit card points?
Think of credit card points like bonus money. You can cash them out to fund your bank account or use them for online shopping. You can even use them for charitable donations.
Making holidays cheaper
Paying for travel, such as airfare, is one of the most popular ways to use credit card points and can often provide a higher redemption value per point, depending on your issuer.
Last December, Haglund and his wife decided to kick off the new year at Disney World. However, thanks to their miles, they only had to pay for one round trip ticket from Utah to Florida. In 2019, they also used points to pay for a trip to Hawaii, paying for four out of six nights at a Marriott resort, as well as all their flights.
“Knowing how each program works, who the partners are, who the alliances are, is a tricky game, but there are these gold mines,” says R.J. Weiss, a certified financial planner and founder of personal finance website The Ways to Wealth.
Weiss recently flew his family from Chicago to Florida for free to see his parents. He channeled his points to American Airlines via British Airways, where he was able to purchase American tickets for 7,500 points one way.
Cash back
Cashback credit cards allow cardholders to use their points as money, either as a credit card statement or as a check issued by the card issuer.
Many American Express cards allow users to convert points into statements. Chase cardholders can use their Chase Ultimate Rewards points as a credit statement or ask the card issuer to transfer money to their bank accounts.
Gift cards and online shopping
Card issuers often run promotions that involve gift card exchangers or using points to make purchases from merchants through the card issuer’s portal. If you choose to do so, Weiss says, make sure the deal you get is at least as good as if you used the points for a refund or credit statement.
Charitable donations
Some card issuers allow points to be used as donations. Some Chase cardholders can use their points as a statement to pay for charitable donations. Amex allows cardholders to enroll in the JustGiving program. They can then use their points as a donation application credit.
How do I redeem credit card points?
Every card issuer has an online portal where you can log in to redeem your points, whether it’s for a cash back, credit statement, travel or other reward. Weiss recommends exploring your options before using points: “Make sure you’re actually getting the best price.”
Are credit card points expiring?
The answer depends on your issuer. Some issuers require you to do something with your card, whether it be spending or redeeming a portion of your points within a certain period of time. This tends to be more true for airline and hotel branded cards. Most credit card issuers offer points that do not expire while the account is open.
How to choose the right credit card?
Start small. Dip one finger into the water. See how it feels. “Don’t start with a whole bunch of new credit cards,” says Martin. “Think: what do you need right now?”
Also, keep in mind that the better the reward, the higher the credit score you will likely need to get approved for this card. And higher rewards are also often accompanied by higher annual fees, sometimes reaching hundreds of dollars a year.
So think about what would be good for your life and balance it with what you can afford. Then, once you get a new reward card, don’t spend money just to get more points.
“Credit cards may seem like something of a surprise,” says Martin, “but if you’re not careful, you can become overwhelmed and drown in debt.”
Beyond these caveats, experts advise asking yourself what you’re trying to accomplish with a bonus card. “People have to start with the experience they want and then redesign how they can use the points for that,” says Weiss.
And value is in the eye of the beholder.
“The person who is the clear winner,” says Weiss, “is someone who gets the experience they want and does it with points.”
bottom line
Credit card points allow you to earn rewards that you can redeem for gift cards, miles, purchases, charitable donations or cashback. Some cards make it easier and faster to earn points in certain categories than others.
This, however, does not mean that you must have multiple cards in order to benefit or earn points. Understanding how credit card points work, how much they cost, and your spending habits can help you choose the best credit card points for you.
All information about BUTThe Visa Signature Mazon Prime Rewards card was independently obtained by CreditCards.com and has not been verified or approved by the issuer.
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The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
