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What are credit card points & how do they work?

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    What are credit card points & how do they work?

    Credit card issuers and banks typically offer reward programs through which you can earn points to redeem for rewards, discounts and other perks. From loyalty programs to cash back points that offer flexible redemption options, there are quite a few different ways to begin earning and redeeming points.

    What are credit card points?

    Points are incentives that can be accumulated through your credit card's cash back, reward or loyalty programs, typically in point, cash back or miles categories. These points are typically accumulated by making purchases with your credit card on specific categories, are updated each billing cycle and may be viewed or redeemed on the credit issuer, hotel or airline's online portal. When applying for a credit card, you may want to consider what type of bonus rewards the issuer offers and whether the set of approved purchases and selected retailers align with your lifestyle and spending habits.

    Keep in mind that some credit cards charge an annual fee. This fee may be worth it when you consider the rewards and perks that come with the card. Be sure to consider the annual fee and the types of perks you will actually benefit from before committing to a specific card.

    Types of credit card reward points & how to earn them

    Reward points can be earned through bonus promotions or by making purchases in certain categories such as dining, travel, gas and more.

    Reward points

    Reward points are a type of incentive earned through making purchases in select categories. Points can be earned through bonus promotions or by making purchases in certain categories such as dining, travel, gas and more. Keep in mind that some cards offer higher rewards points for certain categories than others, so be sure to do your homework and consider how you'll be using your rewards card.

    With a rewards credit card, you may be able to earn 1 point for every $1 spent. Your rewards credit card may also offer more generous point redemption options such as 2-5 points for every $1 spent on travel, dining and other categories such as department stores, grocery stores and more.


    Miles are a type of reward commonly earned through making travel-related purchases. Travel credit cards or airline-branded credit cards offer mile reward point programs. These can be earned by making select airline purchases through travel credit card or loyalty programs and can be redeemed toward free or discounted flights and hotel stays. Generally, you can earn 1-2 miles for every $1 spent on a travel related purchase, but some travel or loyalty cards offer 2-5 miles for every $1 spent.

    Cash back

    Cash back rewards are a percentage of reward points that can be earned and accumulated each billing cycle from spending in select credit card categories. While most cash back cards offer at least 1% cash back for all purchases, some cards may offer 5% cash back on purchases at department stores, grocery stores, or gas stations. You may find that some credit cards also offer up to 5% cash back on travel or on categories that rotate each month. Cash back points may be redeemed for a statement credit, credit toward participating online purchases or gift cards.


    What is the best way to redeem credit card points?

    Cash back and reward points may be redeemed as a statement credit for your monthly bill, online purchases or by check. Miles and travel-specific points may be redeemed for discounted flights and hotel rooms through travel booking portals or through their respective partner brand toward flight tickets.

    Are credit card points worth it?

    Your lifestyle and spending habits will influence whether reward points are worth it to you. There may also be opportunities to earn cash back points by making your regular grocery, department store, and gas station purchases on a reward credit card. Frequent travelers may find it convenient and worthwhile to book hotel rooms and flights through select travel booking sites to earn miles or points or enroll in co-branded loyalty programs for exclusive point accumulation. Bonus promotions (which have spending requirements) could also offer new users generous point redemption, depending on the promotion being offered.

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