What Are Credit Card Points? Everything You Need to Know About Earning and Redeeming Rewards

I can only imagine how farmers feel when they finally reap a bountiful crop and take it to market after months of hard work. While I don’t know for sure, I imagine it is similar to how I feel when I gather up my credit card points and redeem them for something sweet. 

Credit card points are rewards you earn when you use certain credit cards to make purchases. You can redeem points for items such as travel, cash back, or gift cards. The more you spend, the more points you rack up — an added reason to turn everyday shopping into free perks and savings opportunities. 

Now, don’t get me wrong, I know farmers sweat buckets for their rewards compared with how much (or little) I do for mine. Still, I exert a bit of effort to make full use of my credit card points, and in the process I’ve learned some nifty tricks, which I will gladly share with you.

If you are serious about getting the most out of your credit cards, it’s good to understand how the points work. Even a basic understanding can help you turn your everyday spending into cool rewards such as free travel, cash back, or something else that might pique your interest.

Types of Credit Card Points

You can divide points cards into two main types: those with proprietary (co-branded) points and the much larger group offering transferable points. 

Proprietary Points

Proprietary points are brand-specific and tied to your favorite hotel chain or airline. You can spend these points only inside the brand’s network. 

For instance, if you’re racking up Marriott Bonvoy points, you can redeem them for Marriott stays and perks but not much else. Personally, my Hilton Honors card has been very good to me. I also have a few proprietary gas cards that save me a few cents per gallon at the local pumps.

Transferable Points

Don’t want to be boxed into particular brands? Then you’ll love transferable, all-purpose points. You can transfer these little jewels to different travel partners or use them for all sorts of goodies — they’re flexible by design. 

It is as if the reward program knows how to play nice with other programs. You’re the winner because you get the biggest bang for the buck by redeeming these points where they are worth the most.

Popular Credit Card Points Programs:

• Chase Ultimate Rewards: A major player in the transferable points game is Chase Ultimate Rewards. This program is top-rated because you can use your points for travel, cash back, or transfers to partners like United or Hyatt to squeeze out even more value. 
• American Express Membership Rewards: American Express Membership Rewards, another points powerhouse, gives you a myriad of ways to transfer points to airlines and hotels for the best deal. 
• Citi ThankYou Points: Then there are Citi ThankYou Points, which offer similar flexibility through a rich selection of redemption options. These programs let you put your points into action in a way most fitting to your lifestyle, whether booking a trip or just scrounging up some extra cash.

Now, let’s talk about some of the more popular co-branded cards from Chase, Amex, and Citi.

• Marriott Bonvoy Boundless: Chase does an outstanding job with its Marriott Bonvoy Boundless card, which racks up Marriott points for hotel stays, upgrades, and whatever else interests you in the Marriott family of offerings.
• Hilton Honors American Express Surpass®: Over in the American Express universe, you have the Hilton Honors American Express Surpass® Card. It’s a marvelous choice if you are unquestioningly loyal to Hilton Hotels and can’t wait to rack up points for free nights and other perks. 
• Citi® / AAdvantage® Platinum Select® World Elite Mastercard®: Let’s not forget the venerable Citibank, which offers the Citi® / AAdvantage® Platinum Select® World Elite Mastercard®. This card issues miles, the cousin of points (see below). You gain miles with American Airlines, which is ideal for frequent flyers who want to maximize travel rewards. 

All co-branded cards are specific to certain brands, making them terrific choices if you’ve sworn allegiance to particular hotel chains or airlines. Of course, you’re free to own multiple co-branded cards to cover several airline and hotel networks. Many co-branded cards come in several editions, with annual fees from nothing to nosebleed. Your lifestyle will dictate which ones to get and what fees you can live with.

I like to cover all my bases, so I have a few general-purpose cards to accompany my collection of co-branded beauties. Each year, I re-evaluate which ones are keepers and which to deep-six. I keep a close eye on each card’s cost/benefit tradeoffs and compare them to the newest stork deliveries from card issuers. 

It’s also a good idea to monitor for changes in reward programs. Cards frequently sneak in some nasty surprises, like revoking access to a particular lounge network or increasing the points you need for a room upgrade. 

On the flip side, stay alert for short-term special offers on cards you don’t have. For example, you may want to jump onto a card promoting a larger signup bonus or a longer period for its introductory 0% APR.

Points vs. Miles vs. Cash Back

You certainly don’t want to be a points chauvinist. Miles and cash back are just as beautiful in their own ways, as this chart celebrates:

If there’s room in your wallet for a spectrum of credit card types, think about which ones best suit your very unique lifestyle. 

Once again, be mindful of costs vs. perks — our vast library of CardRates articles can point you in the right direction and steer you toward the best options.

The most important thing about your credit card points is knowing how to earn and redeem them. With a little bit of know-how, you can turn your everyday purchases into rewards with juicy payouts.

Earn Points by Using Your Credit Cards

You can’t spend points unless you first earn them. The trick is to use the best card for each spending situation. 

Use the Right Credit Cards

Harvesting the best value from your points cards means using ones that give you the most points for the stuff you regularly buy. Some give you extras for going out to dinner; others pay more for groceries or traveling. Use the right tool for the right job, and those points will pile up faster than a rugby scrum.

A few different cards in your wallet can maximize your rewards on all spending fronts. Just know which categories give the best rewards, so you always get the greatest value per dollar.

Maximize Points on Everyday Purchases

Start racking up those everyday points with your daily spending. Whether it’s shelling out $8 for that morning mocha latte, topping off the gas guzzler at the pump, or your weekly organic grocery run, using a card that rewards specific purchases can make all the difference in the world. 

Be on the lookout for cards with rotating bonus categories. These provide a great way to collect more points, but you may have to adjust your card usage patterns each quarter.

I print a new cheat sheet quarterly, telling me which card to use for each purchase. Now I no longer kick myself for earning only 3X points on my frozen TV dinners when I could have scored 5X with another card. The only hitch is remembering to activate my rotating rewards each quarter.

Special Promotions and Offers

Sometimes, credit card companies offer special promotions allowing you to stockpile bonus points on targeted spending. These bonus rounds are a shot in the arm for bumping up your point balance without much hassle. Be sure to check the details, though, so you know what’s included and how long the promotion will run. 

It’s possible to earn the maximum reward points throughout the year via seasonal offers or limited-time deals.

Take Advantage of Signup Bonuses

Signup bonuses are a great way to juice up your points balance right from the start. Many cards give big bonuses if you spend the required sum in the first three months of card ownership. Just plan your bigger purchases properly to hit that mark without ruining your budget.

A word to the wise: do not buy things you don’t need just to qualify for the bonus. The responsible thing to do is to budget your spending so that you can afford to repay your entire balance each month, thereby avoiding interest. 

How to Redeem Credit Card Points

The secret to maximizing your points lies in how you redeem them. How far the points stretch really depends on how you use them. For example, cashback may provide less value than redeeming points for travel.

Card issuers often partner with merchants to give special, lower rates on specific goods or services and pass them on to you. That’s why points redeemed for travel or other categories result in more value per dollar — it can be a car rental, airline, or hotel stay.

Some cards, like the Chase Sapphire Reserve®, have bonus points on specific purchases, usually in travel categories. In addition, the card supercharges your redemptions with a 50% effective boost when you redeem your points through Chase Travel. 

Keep in mind, though, that potential value bleeds away if you redeem your points for options that offer less value — perhaps merchandise or gift cards. In addition, carrying a balance will cost you interest and dilute the net value of your points. Go with the option that stretches your redemptions furthest.

Points maximization is all about getting the most value out of each dollar you spend. With the right approach, you can turn credit card rewards into big savings and fantastic travel experiences.

Use Multiple Credit Cards to Your Advantage

Owning multiple credit cards unlocks a galaxy of benefits that will help you maximize your rewards. Here is a table on the advantages of stuffing several cards into your wallet.

• Higher earning potential: Different cards offer bonus points for various spending categories, earning you more overall.
• Better rewards flexibility: Multiple cards give you access to a more comprehensive range of redemption options and rewards programs.
• Maximized signup bonuses: Opening new cards can unlock valuable signup bonuses, giving your points balance a big boost quickly.
• Increased transfer opportunities: More cards mean more options to transfer points to travel partners for greater redemption value.
• Higher total credit limit: Multiple cards increase your overall credit limit, improving your credit utilization ratio.
• Wider range of benefits: Each card has perks, like travel insurance, purchase protection, or airport lounge access.

By taking advantage of these benefits, you’ll set every card in your wallet to operate at full throttle. Their job is efficiently earning points you can redeem for the highest value.

Using multiple credit cards isn’t just about earning more points — it’s about combining them to maximize their value. For example, you might use one card for everyday spending and another for specific categories like travel or dining. Then, you can cleverly pool the points together in one rewards program to reach higher redemption thresholds faster.

A great example of this strategy is using the Chase Freedom Unlimited® for everyday purchases and the Chase Sapphire Reserve® for travel and dining. The Chase Freedom Unlimited® gives you a solid base of points with cash back on every purchase, while the Chase Sapphire Reserve® earns you extra points on travel and dining. 

The best part? You can transfer all your points to Chase Sapphire Reserve®, where they become 50% more valuable when redeemed through Chase Travel. So, by combining points from different cards, you’re not just earning more — you’re making each point more useful, too. That’s a smart strategy.

Redeem With Transfer Partners for More Value

Transfer partners are a gold mine when it comes to maximizing value for points. To efficiently mine that gold, you must know what a transfer partner is and how to move your points.

Understanding Transfer Partners

Typical partners are airlines, hotels, and other travel programs that can receive your credit card points. Transfers can dramatically increase the value of your points, especially when transferring to a generous redemption partner.

For example, if you have Citi ThankYou points, you can transfer them to partners such as Singapore Airlines or Choice Hotels. In this case, they may be worth more than if you redeemed them directly through Citi’s portal.

Transferring your points to an airline with a big sale or promotion can stretch your points much further. The real key is to know which of the possible dozen or more travel partners will best fit your travel plans and give you the maximum value for your points.

Another beautiful thing about transfer partners is that you can choose from an expanded set of travel options. You may not want to be limited by the choices in your credit card’s rewards program.

Transfer partners let you explore many more redemption possibilities. That’s a huge advantage if maximizing points and tailoring rewards to particular kinds of travel is what you’re looking to do. You are looking to do that, aren’t you?

How to Transfer Your Points Effectively

While it’s generally a cinch to transfer points between the two programs, your timing and method might make a big difference. First, you want to check whether the transfer ratio is 1:1 — this is the rule for Chase Ultimate Rewards. 

Most programs boast this ratio, but some have higher or lower ones. Transferring at a 1:1 ratio to travel partners simplifies the math to determine how much your points are worth.

Transfers can prevent you from wasting thousands of points on the card’s loyalty program when, say, the branded airline doesn’t fly where you want to go. You’re not being paranoid if you double check that your intended redemption is available at the time you want to use your points. Check for blackout dates or other restrictions before moving your points.

Lastly, keep an eagle eye open for transfer bonuses. Sometimes, a partner may offer bonuses on transferred points, giving you more raw redemption power. If you can time your transfer to take advantage of these bonuses; you will extract maximum value from your points, bringing that dream honeymoon on the Jersey shore even closer to reality.

Time Your Redemptions Right 

Timing is everything when redeeming points. When and how you redeem can make a colossal difference in your points’ value, so you want to get those brain cells working and think strategically. I find coffee helps. Lots and lots of coffee.

Best Times to Redeem Points:

• Off-peak travel season: Your points will get you much further when you book travel during off-peak seasons. The flights and hotels will be cheaper, so your points will go further.
• Sales or promotional periods: Another wise time to redeem points is during special promotions or sales. Airlines and hotels may reduce point requirements during designated periods. For example, you may be able to upgrade your coach airline seat from Barely Human to This Hurts Less with fewer points during certain travel times. 

Periodic reductions in the number of points required to redeem tickets or hotels offer you a big chance to grab extra value. It helps, of course, to have flexible travel dates. Modern online booking websites now routinely show you how much you can save if you’re willing to travel at, say, 3:AM on a Tuesday. 

Long-term planning is great when you can do it. If you realize that you’re going on a big trip next year, it may be worth squirreling away your points for a high-value redemption rather than squandering them on smaller, less valuable rewards in the meantime.

Getting the most value from your points is fantastic, but some traps can mess with your rewards. Let’s run through some things to remember so you can keep those points working for you.

Letting Points Expire 

For starters, letting your points expire can be a buzzkill. The rules vary by program — some points may disappear if you don’t use them after a certain amount of time. For example, some airline miles may expire if you don’t redeem them within a couple of years. On the other hand, hotel programs are usually more liberal regarding expiring points.

Some airline points expire. You can prevent this through small purchases or redemptions.

Now, let’s address how to protect your points from devaluation. Over time, some loyalty programs increase the number of points you must cough up for rewards, meaning your stash won’t go as far as you planned. 

Redeem your points regularly to avoid this. It’s like not letting gift cards gather dust: You want to use them before inflation saps some of their value away.

Not Accounting for Fees and Interest Rates

If you’re not careful, annual fees on some cards may catch you by surprise. Some points cards have heavy fees. Sure, they may come with sweet rewards, but you have to make sure that those rewards are worth the cover charge.

For example, it may not be wise to spend $95 a year on a card while racking up only $50 worth of rewards. So look at the rewards versus the fees each year to ensure that the card is still worth it. Be especially sensitive to changes in the rewards program that devalue your points.

Interest charges are another lousy way to lose value. If you carry a balance and you’re not in a 0% APR promotion, then you are flushing money down the drain through interest charges. Paying interest reduces the net value of your points. The fix: pay off your balance in full each month. That way, 100% of your payment reduces debt. 

Here’s a tip: If you charge only what you can afford to pay off by the due date, you can rack up points without interest costs nibbling away at their value.

Using Credit Cards Irresponsibly to Chase Points

Do you get an endorphin rush every time you check your rewards statement? Yeah, me too. It’s all too easy to become addicted to chasing ever-increasing numbers of points. The symptoms are well-documented: opening too many new cards, overspending just for the rewards, always insisting on picking up the dinner bill on your card, and making your guests reimburse you. 

You get the picture.

Some of these behaviors can knock your score down (by keeping your credit utilization high) or cost you interest (by overspending so much that you can’t pay the entire monthly balance). Recklessly chasing points can leave you buried in debt if you are not careful. It can be tempting to spend more to hit a signup bonus, but if you’re busting your budget, you could find yourself in a really sticky situation.

Once you do serious damage to your credit score, qualifying for high-reward credit cards may become a real hassle. That will make it harder to get the best deals down the road. 

The ways to use credit cards responsibly are to pay your bills on time, keep your unpaid balances low, and don’t let the allure of points entice you to spend more than you can afford. When you straighten up and fly right, you get all the perks without any headaches. A higher credit score means better cards with bigger rewards, so it really is worth keeping an eye on your spending habits.

Some credit cards give you a chance to harvest rewards based on your spending. But you should balance taking advantage of credit card points with responsible spending that doesn’t put you into debt.

As we’ve seen, credit card points have pros, cons, and complexities you should look out for. You can maximize the points you earn by using multiple cards and earn a variety of rewards on your credit card’s dime.