Fri. Feb 26th, 2021

Credit card reward How many points you can earn from advertising spend and sign-up bonuses, but it is not always clear how much value you can get from those points. After all, a card with a high reward is not necessary to earn a good redemption value. The best rewards credit cards for you earn well for your specific expenses and are good redemption values ​​for the rewards you use. When you choose a credit card, find out how much you can earn from its rewards program by researching both its earning and redemption values.

Earn points with credit card

When you make a purchase with a Rewards Credit Card, you earn cash back, miles, or points, which can be valuable to cardholders. US News’ 2018 Travel Rewards Credit Card Survey Found that 53 percent of respondents made more than $ 300 in response value within the previous year. About a fifth of respondents made $ 1,501 or more.

Credit card issuers offer rewards to encourage people to use credit cards instead of other forms of payment. Rewards give consumers an incentive 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. One who 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 state how many points or miles or how much cash you can earn. For example, when you enroll in a new credit card and meet the minimum spending requirement, you can earn a 50,000-point sign-up bonus. But what is the value of those 50,000 points?

How much is a point worth?

Generally, the marks are around 1 percent, but this is not always the case. For some issuers, the value of the points depends on your choice of redemption, which usually includes travel, cash back, gift cards, or merchandise. For example, 10,000 points can be $ 100 when spent on a gift card, but only $ 60 as a statement credit.

Travel rewards are redeemed at a rate of 1 percent or more with almost all issuers. Some travel credit cards offer a good redemption value for travel but lower redemption value for other options. Points redeemed to return cash, gift cards and merchandise may trade at a lower rate depending on the issuer. For example, these credit cards provide higher or lower values ​​depending on the redemption option.

Credit Card Best redemption option Worst redemption option
Platinum card from American Express Travel, gift card, point of sale or donation donation: 1 percent Entertainment: 0.5 percent
Bank of America Travel Rewards Credit Card Travel: 1 percent Cash back: 0.6 percent
Chase Sapphire Favorite Card Travel: 1.25 cents Shopping or merchandise in Chase Pay app: 0.8 percent
PNC indicates Visa Credit Card Gift card or statement credit: 0.2 cents Merchandise: 0.18 cents
Wells Fargo Visa Signature Card Travel: 1.5 cents Cash back: 1 percent

How many faithful programs are worth the mile?

Issuer reward points are similar to, but not identical to, loyalty program points and miles. Miles is often associated with the airline’s frequent flight schedules and can be earned by flying with the airline’s co-branded credit card and airline. Hotels and cruise lines also have loyalty programs. You can earn points by booking a gateway with them and using their co-branded credit card.

Like issuer points, miles and loyalty program points are usually around 1 percent, but unlike most points, miles cannot have a defined value. When you book your trip and other factors, the value of your loyalty rewards may fluctuate depending on flight, class.

US News estimated redemption values ​​for several major travel loyalty programs. After identifying the purchase as a representative of how different consumers could use the travel fidelity program, US News conducted research on the cost of dollars excluding taxes and fees and the cost or miles of points of available travel redemption. Then, comparing these prices, US News calculated the dollar price per point or mile for each event.

The value of the point or mile is based on the reward-to-dollar ratio:

  • Airlines: Four economy, two first class and two business-class round-trip flights.
  • Hotels: Five four-star hotels reside in major metropolitan areas and three two-star hotels in smaller cities.
  • Cruises: A seven-night cruise, four-night cruise and 11-night cruise.
  • Train: A cross-country, interstate and intrastate journey.

Airline loyalty program Price per mile
Aeromexico Club Premier 1.18 cents
Alaska Airlines Mileage Plan 1.46 cents
Elegant Air Myelagiant 1 percent
American Airlines AAdvantage 2.58 cents
British Airways Executive Club 2.51 cents
Delta Air Lines Skymills 1.21 cents
Frontier airlines myFrontier 0.96 percent
Hawaiian Airlines 1.71 cents
Jetblue airways true 1.22 cents
Southwest Airlines Rapid Rewards 1.37 cents
Spirit Airlines Free Spirit 1.27 cents
United Airlines MileagePlus 1.69 cents
Virgin Atlantic Flying Club 5.29 cents

Hotel Loyalty Program Price per point
Hilton honors 0.42 percent
Marriott rewards 0.65 percent
Hyatt’s world 1.6 cents
Wyndham Rewards 0.96 percent

Train or Cruise Loyalty Program Price per point
Amtrak Guest Rewards 1.65 cents
Carnival Cruise Line FunPoints 1 percent
Celebrity Cruises MyCruise Awards Program 0.67 percent
Holland America Line Mariner Society 1 percent
Norwegian Cruise Line Latitude Rewards 0.45 percent
Princess cruise rewards 1 percent
Royal Caribbean MyCruise Awards Program 0.5 percent

Choosing a credit card with good redemption value

The redemption rate of a credit card is a part of its entire redemption value. You should consider factors including redemption options, card costs and points transfer potential.

When you choose a rewards credit card, focus on the value of the redemption you use. Cash back or statement credit may not offer the best redemption value for your card, but may be more useful to you than other options, cash back readymades for half the value of travel or gift cards, but help This may be a better option. Paying bills is more important to you than a travel or gift card.

When calculating credit card earnings and redemption value, factor in the cost of ownership of the card. Annual fees, interest, and other costs may reduce or negative the value of your rewards.

Transfer value
Some credit card rewards programs allow you to transfer points to another program, usually a frequent traveler program. For example, Chase Ultimate Rewards credit cards transfer to multiple airline and hotel travel partners at a value of 1 to 1. If you want more miles needed to buy a flight or take advantage of a better redistribution price, you may want to transfer points to a frequent flyer program.

Some traveler loyalty programs may offer better redemption value, which can make them a good choice for moving your points. For example, if you redeem 30,000 Chase Sapphire Favorite Card Prizes for the trip with a value of 1.25 cents per point, they will be worth $ 375. But if you transfer them to Southwest Airlines Rapid Rewards, which has a point valuation of 1.37 cents, they will be worth $ 411.

US News

With some programs, you can get extra points on transferring them. Most American Express Membership Rewards travel partners have a 1 to 1 transfer value, but 1,000 Membership Rewards points are priced from 2,000 Hilton Honors Points or 1,600 Aeromexico Premier Points. However, you should consider the redemption value offered by the loyalty program before transfer.

US News

Are Points Worth You?

Earning rewards can make financial sense, but is not a good option for every consumer. Rewards cards are not worth it if you plan to keep a balance, have trouble paying on time or are difficult to manage credit cards.

Some juggling may be required to maximize the value of the rewards credit card. Although a single rewards credit card can earn well and is easily managed, you can earn more with multiple credit cards. But you have to meet the sign-up bonus requirements and pay your balance each month to get the full value of your rewards.

Managing multiple cards means staying on top of minimum spending requirements and due dates, which can be more work than being committed to earning rewards. The minimum spending requirements may be beyond your normal spending habits, and it is not a better idea that you would normally spend on a credit card just to earn rewards.

If you have opened multiple credit cards in the last one or two years, some issuers will not approve you for a new credit card. Or they will only allow you to earn a sign-up bonus on a particular card once in a lifetime. These policies may limit your ability to earn sign-up bonuses.

Ideally, you should get a rewards credit card that earns and redistributes at a higher rate for the plan you spend your money on. Pay full attention to the cost of the card and to get the full value from each rewards credit card you need to earn points and maximize redemption.

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