How Do Credit Card Points Work?

How Do Credit Card Points Work?
Point Editorial

Credit card companies constantly offer cardholders perks in exchange for using their cards. Every card is different, but one popular reward incentive is credit card points. You earn points by making purchases with your card, which you can later redeem for various rewards or cash-back.

Read on to learn more about what credit card points are and how they work, the types of points you can earn, and the various ways you can redeem them. 

What are credit card points and how do they work?

Mentioned briefly, credit card points are redeemable rewards that you earn when you spend money. Ultimately, they’re incentives offered by a company to keep you as a customer. 

Most cards offer this benefit at a set dollar rate, meaning that, for example, for every dollar you spend, you’ll earn two points. How many points you can earn differs depending on the card type. It also depends on the type of item you buy. You can earn a fixed number of points, or that number can fluctuate, and you can earn additional points for purchases in specific categories or at certain retailers. 

3 types of credit card points

The primary types of rewards are credit card reward points, airline miles, and cash-back. 

Reward points

Cardholders frequently earn reward points on eligible purchases related to travel, dining, or to shopping at department stores, supermarkets, and gas stations. Each credit card offers different rewards rates for each category. Make sure you read the fine print of your contract.


Making purchases with a particular airline or using a travel rewards credit card accumulates miles that you can exchange for flights or other travel expenses. On average, you earn one or two miles for every dollar spent on travel expenses, but this rate can be higher if you are a part of a loyalty program. 


By accumulating points during a given billing cycle, you can acquire cash-back. The standard rate is one percent cash-back on all purchases. You’ll typically receive your cash at the end of the year. 

How to earn credit card points

You can earn points in multiple ways, described below. 

One: Maximize specific spending. Make sure that you’re using your credit card to make purchases in your card’s bonus reward categories, such as travel-related expenses, television subscriptions, or the credit card company’s retail partners. 

Two: Sign-up bonuses. Presently, a large majority of credit card issuers offer new cardholders a nice lump of points as a sign-up bonus. You’ll most likely have to spend a certain amount of money before you can claim this bonus. 

Three: Referrals. If you’re successful in encouraging family or friends to apply for the credit card, you may be eligible for bonus points. 

Four: Everyday purchases. You earn points for every dollar you spend, so using your card to make necessary daily expenses helps you earn points at a faster rate. One quick method for acquiring points is using your credit card for recurring expenses like your bills, insurance payments, or subscriptions. If you pay these off when the charge goes through, you’ll also boost your credit score.

Five: Milestones. Although this isn’t a common occurrence, sometimes credit card companies will award you with annual bonus points on the anniversary of when you opened your account as a way to thank you for being a continual customer. Other milestones may include hitting a specific monthly or annual spending threshold. 

Do credit card points expire?

Generally, the reward points you earn from major credit card issuers won’t expire. That said, this does depend on the type of card you have and the policies determined by your card issuer.

Airline and travel-related points usually have an expiration date, and if you don’t make use of them within a certain time frame, they will disappear.

How to redeem credit card points

Arguably, using the points you’ve amalgamated through spending with your credit card is just as important as earning the points in the first place. Below are a few redemption options for you to consider. 

One: Travel. Credit card points and air miles especially can be put towards travel purchases. This can include booking hotel stays and flights, or even gaining access to a private lounge at the airport. The ability to earn travel points is common across credit card rewards programs. 

Two: Gift cards. Transferring your points into gift cards is another common way to redeem your credit card points. You’ll be able to choose what type of gift card you receive. Remember that redeeming your earnings in the form of gift cards doesn’t always give you the best value on your points. 

Three: Merchandise. In some cases, you can use your points to make purchases with retailers like Amazon. 

Four: Statement credits. Your credit issuer will transfer your points directly into your credit card account, and it will pay off part of your balance. This option isn’t very common. 

Five: Charitable donations. Sometimes, companies will let you donate your points to nonprofit organizations or charities. You can double-check that this is an appropriate means of redemption by contacting your credit card issuer or a specific charity’s website. 

Six: Cash-back. Cash-back earnings mean you can trade your points for money, usually in the form of a check that is either mailed or sent to you electronically. This can be great, depending on your everyday spending habits.

While many cards — debit and credit alike — offer cash-back rewards, some are certainly better than others. One fantastic option for you to consider when considering a new payment tool is Point Card.  

Point Card isn’t a credit card. It’s designed as a transparent, easy-to-use alternative payment card that allows cardholders to exercise fiscal independence. You have the freedom to spend your own money as you see fit while also receiving exclusive benefits by means of Point’s extensive rewards program. This includes unlimited cash-back and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases. 

You work hard for your money, and Point works just as hard for you in return. Alongside helping you grow your wealth and earn frequent rewards, Point comes with built-in measures to help protect that wealth. Car rental and phone insurance, travel cancellation insurance, two free ATM withdrawals each month, fraud protection with zero liability, and no interest rates are just a few of these features. 

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