The Beginner’s Guide To Credit Card Rewards: Points & Miles 101

If you’re using a debit card to make purchases, then you’re missing out on some great freebies. When you use a rewards credit card, you’ll be getting something in return for your expenses. Meanwhile, you’ll get nothing from a debit card. Not only that, rewards cards often come with extra benefits like baggage delay insurance and purchase protection.

However, before we go further into details about points and miles, you should never spend more than you can afford. While earning rewards is fun, those freebies aren’t very “free” if you’re digging yourself into a financial hole.

Check out our list of the best credit card bonuses here.

Read below for more information on points and miles.

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Points & Miles 101

Points and miles are currencies that are issued by credit cards, airlines, and hotel chains to reward you for your loyalty. This is why they call it the “loyalty program.” You’ll be able to earn points or miles each time you take a trip or spend using your rewards credit card. After you’ve accumulated enough points, you’ll be able to trade them for travel rewards:

• Use airline miles for airline tickets.
• Hotel points for hotel stays.
• Use credit card points to book all types of travel.

However, be sure that you remember not all points and miles are made the same. The average currency value will vary depending on the program. Our valuation guide is a great place to find the right value of your points and miles for the current month.

To figure out the value of your points when used towards a specific award, divide the cash price by the number of points.

Value per point = cash price / total points.

A rule of thumb, you want to avoid awards that yield lower values than what is listed in the valuation guide. If you see a higher number, then this is a great redemption.

For specific programs, you’ll be able to transfer points to other loyalty programs. While this does take more work, it offers great flexibility and is the best way to maximize your rewards.

Our Favorite Rewards Credit Cards

There are lots of credit cards that offer rewards. So, if you’re just starting out, it’s hard to find the one that will best fit you and your needs. You can make this process faster and easier by first considering our favorite rewards credit cards below:

You might have noticed that all the cards we mentioned above have one thing in common: they earn transferable points. That means you can convert the points you earned on these cards into airline miles and – depending on the bank – hotel points.

Having a network of transfer partners increases the value of points because you can use them to book award flights across all airline alliances (more on that later) as well as free hotel stays at luxurious properties.

If you often fly with a particular airline or you frequently stay with a specific hotel chain, then you might want to consider a co-branded credit card. But keep in mind, these are limiting because you can only redeem your rewards with one specific airline or hotel chain.

Our Favorite Co-Branded Credit Cards

Co-branded airline credit cards are:

• Alaska Airlines Visa Signature®
• Citi® / AAdvantage® Platinum Select® World Elite Mastercard®
• Delta SkyMiles® Gold American Express Card
• Delta SkyMiles® Platinum American Express Card
• JetBlue Plus Credit Card
• Southwest Rapid Rewards® Premier Credit Card
• United℠ Explorer Card

The co-branded hotel credit cards include:

• Hilton Honors American Express Aspire Card
• Hilton Honors American Express Surpass® Card
• IHG® Rewards Club Premier Credit Card
• Marriott Bonvoy Brilliant American Express Card
• Marriott Bonvoy Boundless™ Credit Card
• The World of Hyatt Credit Card

Earning Points & Miles

Frequent Flyer Programs

Every airline (or airline group) has their own frequent flyer program with their own rewards system and currency. If you sign up for a frequent flyer program, you’ll earn miles each time you travel with the carrier. These rewards will add up over time until you’ll be able to redeem them for a free flight.

There are 10 major airlines in the United States:

• Alaska Airlines
• Allegiant Air
• American Airlines
• Delta Airlines
• Frontier Airlines
• Hawaiian Airlines
• JetBlue
• Southwest Airlines
• Spirit Airlines
• United Airlines

The four biggest airlines – in terms of size and passenger volume – are American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.

Elite Status

Frequent flyer programs reward their most loyal customers with elite status, which unlocks additional VIP benefits to make their travel more smooth and comfortable. The value of elite status is different from airline to airline.

Airline Alliances

Now that we’ve gone over frequent flyer program basics, let’s get into airline alliances. There are three major airline alliances: Oneworld, SkyTeam and Star Alliance.

The carriers within each alliance “play nice” with each other, letting frequent flyer members use their miles from one program to book award flights on another airline. These partnerships allows each carrier to broaden their reach and offer award destinations around the world.

Points & Miles Tips

Conclusion

Overall, when you sign up for a loyalty program, it will give you a way to earn rewards for spending with specific airlines, hotels, or credit cards. Additionally, when you have a rewards card in your wallet, it makes it easier for you to earn points and miles faster. However, like any other credit card, you’ll have to be aware of your spending habits and other financial factors.

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