Reward points are a type of incentive earned through making purchases in select categories. Points can be earned through bonus promotions or by making purchases in certain categories such as dining, travel, gas and more. Keep in mind that some cards offer higher rewards points for certain categories than others, so be sure to do your homework and consider how you'll be using your rewards card.
With a rewards credit card, you may be able to earn 1 point for every $1 spent. Your rewards credit card may also offer more generous point redemption options such as 2-5 points for every $1 spent on travel, dining and other categories such as department stores, grocery stores and more.
Miles are a type of reward commonly earned through making travel-related purchases. Travel credit cards or airline-branded credit cards offer mile reward point programs. These can be earned by making select airline purchases through travel credit card or loyalty programs and can be redeemed toward free or discounted flights and hotel stays. Generally, you can earn 1-2 miles for every $1 spent on a travel related purchase, but some travel or loyalty cards offer 2-5 miles for every $1 spent.
Cash back rewards are a percentage of reward points that can be earned and accumulated each billing cycle from spending in select credit card categories. While most cash back cards offer at least 1% cash back for all purchases, some cards may offer 5% cash back on purchases at department stores, grocery stores, or gas stations. You may find that some credit cards also offer up to 5% cash back on travel or on categories that rotate each month. Cash back points may be redeemed for a statement credit, credit toward participating online purchases or gift cards.
Cash back and reward points may be redeemed as a statement credit for your monthly bill, online purchases or by check. Miles and travel-specific points may be redeemed for discounted flights and hotel rooms through travel booking portals or through their respective partner brand toward flight tickets.
Your lifestyle and spending habits will influence whether reward points are worth it to you. There may also be opportunities to earn cash back points by making your regular grocery, department store, and gas station purchases on a reward credit card. Frequent travelers may find it convenient and worthwhile to book hotel rooms and flights through select travel booking sites to earn miles or points or enroll in co-branded loyalty programs for exclusive point accumulation. Bonus promotions (which have spending requirements) could also offer new users generous point redemption, depending on the promotion being offered.
