Are you a new credit card owner? Do you want to know “how credit card points work?” If you answered yes, then you’ve arrived at the right place.
You must’ve definitely heard of credit card rewards and points, but how exactly do the reward points work? And how can you maximize the value of your redemptions? Earning and redeeming rewards is simple if you understand how point systems work. So, let’s get to it.
What Are Credit Card Points?
Credit card points, hotel points, airline miles, or cashback are all options for the top rewards that credit cards earn. These points are earned every time you use your credit card, and you may even earn additional rewards on select transactions.
Credit card points are the benefits you earn within the card’s own rewards system. They may be redeemed for things like trips, statement credits, gift cards, and other things. Chase’s Ultimate Rewards® points, American Express’s Membership Rewards® points, and Citi’s ThankYou® points are a few examples.
However, many individuals use the word “credit card points” to refer to any credit card-based incentives, such as hotel and airline miles.
How to Earn Credit Card Points?
When it comes to earning credit card points, there are a few ways other than just using your credit card for purchases to earn reward points.
Utilize Bonus Category Spending
In most situations, credit card points are earned by making certain transactions with your card. Many issuers provide various point rates for various sorts of transactions. For example, if you’re a frequent traveller who spends a lot of money on plane tickets and hotel stays, the American Express The Platinum Card® gives 5X Membership Rewards points on flights booked directly with airlines or through American Express Travel.
Sign Up Bonus
Many credit card companies provide a sign-up incentive that allows you to accumulate a significant amount of points at once. Before you can collect the bonus, you usually have to satisfy a particular spending requirement within the first few months of opening the card, so make sure that fits with your budget before signing up.
Referrals
Some issuers reward current customers who suggest a friend or family to apply for the card. In most cases, you’ll suggest a friend through a link and get a set number of points for the referral. The quantity of points awarded will be determined by the issuer’s unique incentive.
Redeeming Credit Card Points
Reward points may be redeemed for anything from statement credits to online shopping. Some credit cards may allow you to redeem using their mobile app, while others may require you to access the issuer’s portal.
For example, if you have an Amex card that earns American Express Membership Rewards, you may redeem your points by entering into your card account or visiting the Membership Rewards site. You may then utilize your points to pay your credit card transactions, transfer your points to partner travel reward programs, and take advantage of other useful features.
Let’s discuss a few places where you can redeem your collected credit card points:
Statement Credits
The issuer will deposit the cash value of the redeemed rewards points straight into your account balance with a statement credit. Because not every issuer provides this option, if that’s how you want to redeem your points, be sure it’s accessible to you before applying.
Purchases of Travel
You may normally redeem the points and miles you earn on every qualified travel cost, such as an airline ticket or a hotel room, using a travel rewards card. Many travel cards also include opulent advantages such as airport lounge access. Credit cards frequently allow you to transfer your rewards to travel loyalty programs, which means you may convert your credit card points into hotel points or airline miles.
Gift Cards
Gift cards are a popular method of redeeming your points. There are several alternatives available, ranging from entertainment to eateries. Because different issuers may provide different gift card possibilities, if you have numerous cards from different issuers, you may have multiple stores or brands to pick from. Be aware that gift card redemption does not always provide the best value for your points.
Online merchants
Some issuers permit you to redeem your points at online stores such as Amazon, Flipkart, Myntra etc. While this appears to be an easy way to redeem your points, it may not be the most profitable due to issuer limits.
Do Credit Card Points have an Expiration Date?
Your hard-earned points may expire depending on the issuer and type of card you have. Most major issuers have no-expiration rules, so if you have a standard rewards card rather than a branded travel card, your points are less likely to have an expiration date. If you have an airline or hotel credit card, your points and miles will normally expire within the time frame specified by the issuer.
Keep track of potential expiration dates with your card issuer so you don’t lose out on redeeming your points for important upgrades, benefits, and other chances.
Conclusion
The card you use will determine your redemption possibilities, earning structure, and point value. In any case, plan ahead of time how you will use your credit card points. Why not pick cashback if your points are worth more as cashback than they would be as gift cards?
Similarly, if the value of your points improves as you redeem them for travel expenditures, it makes sense to store up your points for your next big trip. The more you learn about your credit card’s point structure, the more you’ll get out of your rewards.