Are Credit Card Points Worth It?

Education about credit card in india

Most major credit cards offer rewards—but are the rewards you earn significant enough to make applying for the card worthwhile? When used responsibly, a rewards credit card can help you save money on everything from travel bookings to Amazon purchases.

However, not everybody knows how to maximize their credit card rewards, and not everybody knows what a good rewards card can do for them.

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Are our rewards credit cards worth it? In most cases, yes—which is why we’re giving you the information you need to get the most out of your rewards-earning credit cards. In this guide, we’ll go over the following:

What is a rewards credit card?

How do credit card rewards work?

Pros and cons of rewards credit cards

Should you get a rewards credit card?

What is a rewards credit card?

A rewards credit card is exactly what it sounds like: a credit card that rewards you when you use the card to make purchases.

With a basic understanding of how rewards cards work, you can earn actual Cash with minimal effort. Let’s start by looking at the three basic types of credit card rewards: Cashback, points, and miles.

Cashback

Cashback cards are the most straightforward type of rewards card because they use a currency you’re already familiar with: dollars. You earn a percentage of every qualifying purchase back. For example, 3 percent cash back on a $100 purchase would earn you $3 in rewards.

Some credit cards offer the same percentage on everything you buy, like the Wells Fargo Active Cash℠ Card, which offers unlimited 2 percent cash rewards on purchases. These cards are useful for people with varied spending habits and those who plan to use one credit card for everything.

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Points and miles

Point-based cards and miles-based cards work similarly. Instead of earning dollars on every purchase, you earn either points or miles. Like cash back, you usually earn points or miles on your purchases at a set rate—one point per dollar spent, for example. Many points and mile-based rewards cards increase your rate when you spend in certain categories.

The Capital One Venture Rewards Credit Card, for example, offers a flat rate of 2 miles per dollar on general purchases. Cardholders can also earn 5 miles per dollar on hotels and rental cars booked through Capital One Travel.