How are reward points calculated?

Credit card points are worth an average of 1 cent apiece, though credit card point values usually range from 0.5 cents to 1.5 cents per point, depending on the card and the redemption method. For example, you might spend 2,500 points on a $25 gift card, but the same number of points might only get you $15 when redeemed for merchandise.... read full answer

More credit cards reward users with points than you might think, too. For instance, some so-called “cash back” cards actually give points, which cardholders can redeem at a rate of 1 cent per 1 point.

Average Credit Card Point Values by Issuer:

High Credit Card Point Values:

• U.S. Bank FlexPerks Gold: 1.5 cents per point when redeemed for plane tickets, hotels, and rental cars.
• Chase Sapphire Reserve: 1.5 cents per point when redeemed for travel through Chase Ultimate Rewards; 1 cent per point for other redemption methods.
• J.P. Morgan Reserve: 1.5 cents per point when redeemed for travel through Chase Ultimate Rewards; 1 cent per point for other redemption methods.
• Chase Sapphire Preferred: 1.25 cents per point when redeemed for travel through Chase Ultimate Rewards; 1 cent per point for other redemption methods.
• Citi Premier: 1.25 cents per point when redeemed for travel through Citi ThankYou; 1 cent per point for gift card redemptions; 0.5 cent per point for cash back redemptions.

It’s important to note that credit card points can get devalued at any time by the card issuer. That means the point values listed above can change. Usually, card issuers will reserve the right to change rewards programs - including point values - in the card’s terms and conditions.

For example, a card issuer can decide that a $300 plane ticket should cost 1,000 more points than it does currently, which in turn lowers the redemption value of the reward point. That’s why cash back is usually a better value than points - $1 in cash back will always be worth $1.

The best way to use credit card points is for travel purchases, according to a WalletHub research. That’s because issuers usually offer the best value on this particular category. But that’s not a rule across the board. The best way to use credit card points will vary depending on what ... read full answercredit card you have. Your points could be worth just as much (or even more) in cash back or gift cards. So, it’s a good idea to check the value of all the redemption methods before you redeem your points.

The best way to find out what your points are worth is to log into your credit card account online. Then, look for a rewards redemption section, and see how many points are needed for merchandise, cash back, gift cards, and travel. Then, find out how much you’d pay for those things outside of the redemption portal and do a points-to-dollars comparison. For example, if 100 points gets you 75 cents of a gift card, or $1 in plane tickets, you should go with the plane ticket.

You can redeem your credit card rewards online, through the issuer’s mobile app, or over the phone, depending on the card. The most common credit card rewards redemption options include cash back, travel purchases, and gift cards.

Once you redeem your credit card rewards, they’ll be subtracted from your rewards balance immediately. If you wish to redeem your rewards for a statement credit, it will generally be credited to your account within 2-3 business days, depending on the card. In some cases, rewards will expire if you do not use them by a certain time.... read full answer

Types of Credit Card Rewards

• Points: Credit cards that offer points generally give at least 1 point per $1 spent on purchases. You can redeem points for hotel stays and other travel expenses, statement credits, gift cards, or merchandise, depending on the card. Points cards are sometimes affiliated with hotel chains.
  
  Credit card points are worth an average of 1 cent apiece, depending on the card and the redemption method.
• Miles: Credit cards with miles are travel oriented, often affiliated with a specific airline. Rewards typically start at 1 mile for every $1 you spend on purchases. Miles can be redeemed for airfare, other travel expenses, gift cards, cash, or merchandise. Cards co-branded with a particular airline may reward you with seat upgrades, early boarding on flights, free checked bags, and more.
  
  Miles are worth an average of 1 cent each. The value varies based on the airline or credit card rewards program as well as how the miles are redeemed.
• Cash Back: Credit cards with cash back rewards return a portion of each purchase cardholders make, usually at least 1%. You can redeem cash rewards as a check, direct deposit to your bank account or statement credit, depending on the card. Some cash back rewards can also be redeemed for gift cards and merchandise through the issuer’s online rewards portal.

How to Redeem Your Credit Card Rewards Online

1. Log in to your online account. Specifics will vary by issuer, but your rewards will usually be featured on a main account page.
2. Click on your rewards balance. Once you click on your rewards balance, you’ll be taken to a page with more information about your redemption options.
3. Select how you’d like to redeem your rewards. You may be able to redeem your rewards for travel purchases, cash back in the form of a check or statement credit, merchandise, or gift cards, depending on the rewards card.
4. Redeem your rewards. Once you redeem your credit card rewards, the points, miles, or cash back will be deducted from your rewards balance immediately. If you’re redeeming for statement credits or covering past purchases, your account will usually be credited within 2-3 business days. If you redeem your rewards for gift cards or merchandise, you can expect them to arrive in the mail within 2-3 weeks.

While many rewards cards will let you choose from multiple redemption options, you’ll usually get the most value with one in particular. For example, travel rewards credit cards will often give you the most value when you redeem your rewards for travel purchases. Also, your rewards may be worth less if you redeem them for cash back or gift cards.

On average, credit card rewards are worth 1 cent per point or mile. Most major credit card issuers (like Chase, Capital One, and American Express) advertise that your rewards will not expire as long as your account remains open and in good standing. But you should check the exact terms and conditions of your specific credit card to make sure you don’t lose any rewards you’ve earned.