REWARDS CREDIT CARDS advertise how many points you can earn from spending and sign-up bonuses, but it’s not always clear how much value you can get from those points. After all, a card with a high rewards earning value doesn’t necessarily have a good redemption value. The best rewards credit cards for you earn well for your typical spending and have good redemption values for rewards you can use. When you choose a credit card, find out how much you can get from its rewards program by researching both its earning and redemption values.
Earning Points With Credit Cards
When you make a purchase with a rewards credit card, you’ll earn cash back, miles or points, which can be valuable for cardholders. U.S. News’ 2018 travel rewards credit card surveyfound that 53 percent of respondents earned more than $300 in rewards value within the last year. About a fifth of respondents earned $1,501 or more.
Credit card issuers offer rewards to encourage people to use credit cards instead of other forms of payment. Rewards give an incentive for consumers to open and use credit card accounts.
Some rewards cards offer a flat rate for earnings, which earns 2 miles per dollar on all purchases. Others earn bonus rewards for certain spending categories., which earns three points per dollar on travel, two points per dollar on dining out and entertainment, and one point per dollar on all other purchases.
When you sign up for a rewards credit card, the issuer should explain how many points or miles or how much cash back you can earn. For example, you might earn a 50,000-point sign-up bonus when you enroll in a new credit card and meet the minimum spending requirement. But what is the value of those 50,000 points?
How Much Is a Point Worth?
Generally, points are worth about 1 cent each, but that’s not always the case. For some issuers, the value of points depends on your choice of redemption, which typically includes travel, cash back, gift cards or merchandise. For example, 10,000 points may be worth $100 when spent on gift cards but only $60 as a statement credit.
Travel rewards redeem at a rate of 1 cent per point or higher with almost all issuers. Some travel credit cards offer a good redemption value for travel but a lower redemption value for other options. Points redeemed for cash back, gift cards and merchandise may trade in at a lower rate, depending on the issuer. For example, these credit cards offer higher or lower values depending on the redemption option…Read more>>