If you have a credit card that earns reward points or cash back, you may be wondering how to redeem your earnings. Depending on the credit card issuer and the rewards program, there may be a number of reward redemption options available to you.
Taking the time to fully understand how credit card rewards work can help you get the most value from your credit card. For example, you may be able to put those points toward a statement credit, redeem for gift cards, shop with points at certain retailers, or transfer points to other loyalty programs to help lower the cost on travel purchases.
There are basically two categories of rewards credit cards: cash back rewards and reward points. Generally, cash back credit cards let you redeem for cash in the form of a statement credit or a check, while reward points credit cards have a wider range of redemption options. Travel credit cards are a subcategory of rewards credit cards, and they’re sometimes tied to a specific airline or hotel chain or the credit card issuer’s travel portal.
To help you better understand how these programs work, here’s what you need to know about redeeming points.
What are credit card reward points?
Credit card reward points are earned when you make eligible purchases on a credit card or complete certain activities. Some credit cards award bonus points for spending in certain categories, while others offer flat-rate points for eligible purchases. Reward points accumulate in your account until you redeem them. Although some reward points are subject to expiration.
The term “reward points” is sometimes used as a catch-all term that may also include miles (airline co-branded cards) and cash back. Every credit card issuer has its own points valuation system, but it’s common practice for 1 point to equal 1 cent. In other words, if you accumulate 5,000 points, that would be the equivalent of $50 in value.
The value of points can vary depending on your redemption choices and your credit card issuer. For example, points may be worth less if you use them to buy merchandise and they may be worth more if you redeem for travel.
How do I redeem credit card reward points online?
Redeeming credit card reward points online is usually a simple process. Start by logging into your credit card account online or via your mobile app, and then navigate to your points balance. From there, you should be able to connect to a specific page that lists your various reward redemption options.
Depending on the credit card, you may be able to redeem your reward points for travel, gift cards, a statement credit, or a charitable donation. The redemption process varies depending on your credit card and rewards program.
Statement credit
Redeeming for a statement credit is typically the simplest option. Depending on the credit card, you may need to redeem in increments (such as $5 or $25), or you may be able to redeem any amount you choose. Once you submit your request, the statement credit will appear on your account. It may occur immediately, within a few business days, or within the next billing cycle.
Gift cards
Some programs let you shop for gift cards with your points balance. You’ll be able to buy gift cards from various retailers, restaurants, or service providers in different amounts. If you buy a digital gift card, you’ll receive it via email, while physical gift cards will be sent by regular mail. It could take a few days to several weeks for your gift cards to arrive.
Travel
Some credit card issuers let you redeem your points within their own travel portals, where you can select and book airline tickets or hotel stays. If this isn’t an option for you, you could pay for travel with your credit card and then redeem points for a statement credit toward that purchase after the fact.
Pay with points
If your credit card allows you to pay with points at partner retailers, you’ll see this option available during the checkout process when you use the card as your payment method. It may allow you to pay with points, which may also display the dollar equivalent applied to your purchase.
Transfer to travel partner
If you are part of a loyalty program with an airline or hotel that partners with your credit card, you may be able to transfer over your points. Points may transfer at a 1:1 ratio, which means 1 credit card point equals 1 point in the airline or hotel program. After moving your points over, they should be available for booking travel.
How do I earn credit card reward points?
You can earn credit card reward points in a number of ways. The most common way is to make eligible purchases with your credit card. You may also earn reward points if you qualify for a sign-up welcome bonus, for referring someone to apply for the credit card, or for adding an authorized user to your account. Refer to the Rewards Terms and Conditions of your specific credit card to learn more about how to earn rewards with your credit card.
Purchases
Using your credit card to shop at retailers and pay for services may help you earn reward points. In some cases, you may earn bonus rewards for purchases made in a certain category. For example, a card may offer 3 points per dollar spent on groceries, 2 points per dollar spent on dining, and 1 point for other eligible purchases. Other credit cards may have rotating bonus categories that change each quarter. Note that specific transactions, such as cash advances or balance transfers, typically do not count as purchases and do not earn reward points.
Sign-up bonuses
Some credit cards include a welcome offer or sign-up bonus to attract new cardholders. It typically requires the cardholder to meet a minimum spending requirement in a set period of time to earn a large number of points. For example, a card may offer 30,000 bonus points for spending $1,500 within the first three months of account opening.
Other ways to earn
Some credit card issuers incentivize cardholders to refer a friend or add an authorized user to their account. The reward for doing so varies but is often a reward points bonus.
Review your credit card’s terms and conditions
Earning credit card points over time is a welcome perk for cardholders. Every rewards program is different, so it’s important to do your own research. You could review the credit card’s rewards terms and conditions or read through frequently asked questions on the credit card issuer’s website to understand how points redemption works. You can also call the credit card company’s customer service line if you have questions about redeeming your reward points.
Once you understand the process, you can strategize the best way and the best time to use your points. You may decide to save them to offset the cost of your next trip or redeem for gift cards at the end of the year to use for holiday gifts. Or, you may prefer to receive a bank deposit, physical check, or a statement credit.
Compare your redemption options carefully to see which provides you with the most value and best fits your lifestyle.
