Did you know that Americans leave $16 billion worth of credit card rewards unused every year? That’s right – billions in free money sitting unclaimed because most cardholders don’t fully understand how credit card points work.

Whether you’re a points-collecting pro or just got your first rewards card, maximizing your benefits comes down to knowing the system. Credit card points can translate into free flights, hotel stays, cash back, or even direct deposits to your bank account.

The catch? Not all points are created equal. Some reward programs offer less than one cent per point, while others can deliver three cents or more in value. Understanding these differences can mean the difference between modest savings and significant returns on your everyday spending.

Ready to turn those unused points into real money? Let’s break down exactly how credit card points work and the smartest ways to use them.

How Credit Card Points Are Earned

Credit card rewards have transformed how savvy consumers approach everyday spending. At their core, these rewards programs function as incentives for using your card, but understanding how they work is key to maximizing their value.

Types of rewards programs: points, miles, and cash back

Credit card issuers typically offer three main types of rewards structures: points, miles, and cash back. Each functions differently and appeals to different spending habits.

Cash back rewards are the most straightforward option. When you make a purchase, you earn a percentage of that purchase back as a rebate. For instance, a card offering 2% cash back provides 2 cents back for every dollar spent ^[1]. These rewards are typically applied as statement credits or direct deposits to your bank account.

Points-based programs award a fixed number of points per dollar spent. Points cards often provide more redemption flexibility than simple cash back cards ^[2]. Many major issuers like Chase, American Express, and Citi have their own points currencies—Chase Ultimate Rewards®, American Express Membership Rewards®, and Citi ThankYou® points, respectively ^[1]. The value of your points frequently depends on how you choose to redeem them ^[2].

Miles programs are predominantly associated with travel rewards. These are often tied to specific airline loyalty programs or general travel cards. With co-branded airline cards, the miles you earn accumulate in your loyalty account with the connected airline rather than with the credit card issuer ^[2]. As with points cards, you’ll typically earn a fixed number of miles for every dollar spent ^[2].

How spending categories affect point accumulation

Not all purchases earn rewards equally. Card issuers structure their programs to award more points for specific types of spending through what are known as “bonus categories.”

Rewards cards generally follow one of three earning structures:

1. Flat-rate rewards – These cards offer the same earning rate on all purchases regardless of category, typically 1-2% cash back or 1-2 points per dollar ^[3]. They’re ideal for those who want simplicity.

2. Tiered rewards – These cards provide higher rewards rates in specific categories and a lower rate (usually 1%) on everything else ^[3]. For example, the Blue Cash Preferred® Card from American Express offers 6% cash back at U.S. supermarkets (on up to $6,000 per year, then 1%) and on select U.S. streaming services, 3% on transit and U.S. gas stations, and 1% on other purchases ^[4].

3. Rotating category rewards – Some cards like the Chase Freedom Flex® offer higher rewards (typically 5%) in categories that change quarterly, requiring cardholders to activate these categories each quarter ^[5]. This maximizes rewards but demands more attention.

How card issuers classify purchases can significantly impact your earnings. For instance, American Express breaks down travel purchases into several sub-categories, and which ones qualify for bonus rewards varies by card ^[6]. Additionally, purchases must be made directly with merchants to qualify for bonus points in many cases ^[6].

Strategic spending is the cornerstone of maximizing rewards. Using cards that align with your spending patterns—like a card with grocery bonuses if you spend heavily at supermarkets—can substantially increase your total earnings ^[7]. Furthermore, combining cards with complementary bonus categories allows you to maximize returns across all spending ^[8].

Understanding Point Value and Redemption Rates

Determining the actual value of your credit card rewards can feel like deciphering a secret code. Unlike cash, which has a fixed value, points and miles can be worth vastly different amounts depending on how you use them.

What is a point worth? Baseline vs. real value

Most credit card points have a baseline value of approximately 1 cent per point ^[9]. However, the real value varies significantly based on your redemption choice. This baseline serves as a starting point for evaluating whether a particular redemption option offers good value.

To calculate a point’s value for any specific redemption, divide the cash value of the reward by the number of points required, then multiply by 100 ^[10]. For example, if a $500 airline ticket costs 50,000 points, each point is worth 1 cent ($500 ÷ 50,000 × 100 = 1 cent) ^[11].

The difference between baseline and real value becomes apparent when comparing redemption options. Whereas cash back typically offers a fixed value, travel redemptions through transfer partners might yield substantially higher returns—sometimes exceeding 2 cents per point ^[12].

How issuers assign value to points

Credit card issuers create point valuation structures that vary by program and redemption method. These generally fall into two categories:

Fixed-value points maintain consistent worth regardless of how they’re used. Cash back programs typically offer fixed values, with each point worth exactly 1 cent ^[9]. These programs provide simplicity and predictability.

Transferable points offer flexibility and potentially higher value. Programs like Chase Ultimate Rewards, American Express Membership Rewards, and Citi ThankYou points allow transfers to travel partners where values can increase significantly ^[12]. Chase Ultimate Rewards points, for instance, are worth around 1.09 cents on average but can reach 1.5 cents when used for travel ^[13].

Issuers create different value tiers within their own programs as well. The Chase Sapphire Preferred increases point values by 25% when redeemed through their travel portal, while the Sapphire Reserve offers a 50% boost ^[12].

Examples of high vs. low value redemptions

High-value redemptions typically involve travel transfers. Consider this example: 25,000 Chase Ultimate Rewards points transferred to Hyatt (a Chase partner) could be worth $550 based on a valuation of 2.2 cents per point ^[14]. These same points might book a three-night stay at a Category 2 Hyatt property normally costing over $750 in cash—yielding significantly more value than the baseline ^[14].

Low-value redemptions often involve merchandise or shopping portals. A tea kettle priced at $125 might require 27,312 American Express Membership Rewards points—a terrible value considering those points are worth approximately $328 based on a 1.2 cent-per-point valuation ^[14].

Other notoriously poor redemptions include:

• Using points for statement credits (often below 1 cent per point) ^[15]

• Shopping with points on retail websites ^[16]

• Redeeming for magazine subscriptions ^[14]

Consequently, not all redemption options are created equal. A savvy cardholder might get three times more value through strategic redemptions compared to accepting the first available option. The difference between a good and poor redemption choice could mean leaving hundreds of dollars in potential value on the table.

Despite the complexity, understanding point values empowers you to make informed decisions about when to use points versus paying cash—ultimately determining whether your rewards card is truly rewarding.

Ways to Redeem Credit Card Points

Once you’ve accumulated a stockpile of credit card points, the next question becomes how to use them effectively. Most credit card rewards programs offer multiple redemption pathways, each with different values and benefits.

Redeem for travel through issuer portals

Most major credit card issuers maintain dedicated travel portals where cardholders can book flights, hotels, rental cars, and vacation packages directly with points. These platforms function similarly to travel sites like Expedia or Booking.com, but allow payment with rewards.

With Chase Ultimate Rewards, booking through their travel portal typically yields a fixed value of 1 cent per point. Nevertheless, premium cards like the Chase Sapphire Reserve® provide 50% more value (1.5 cents per point) when redeeming through this method ^[17].

Many issuers also permit transferring points to partner airlines and hotels—often the most valuable option. This approach involves converting credit card points to an external loyalty program’s currency, such as transferring Chase points to United MileagePlus or Marriott Bonvoy ^[18].

Use points for gift cards or merchandise

Exchanging rewards for gift cards is straightforward and available through most programs. This option typically offers around 1 cent per point value, although special promotions occasionally provide better rates. For instance, Chase sometimes offers 10% discounts on select gift cards ^[2].

Most issuers partner with hundreds of merchants, ranging from retailers to restaurants. Chase Ultimate Rewards, specifically, allows redemption for gift cards from national brands with options for both digital and physical delivery ^[1].

Merchandise redemptions through issuer shopping portals are also common, yet usually provide poor value—often less than 0.5 cents per point ^[15]. Before clicking “purchase,” always calculate the redemption value by dividing the item’s retail price by the required points.

Apply points as statement credits or direct deposits

Statement credits reduce your card balance but don’t typically count as monthly payments—you’ll still need to make at least your minimum payment separately ^[19]. This redemption method is straightforward but may offer lower value with some programs. American Express Membership Rewards points, for example, are worth only 0.6 cents each when applied as statement credits ^[17].

Alternatively, many issuers allow rewards to be deposited directly into checking or savings accounts. This option effectively converts your points to cash, giving you maximum flexibility ^[20].

Donate points to charity

For philanthropically minded cardholders, most major issuers facilitate donations to partner charities. American Express allows donations to over 1.5 million registered U.S. nonprofits through their partnership with JustGiving™, with each point worth 0.7 cents toward charitable donations ^[21].

Other programs maintain relationships with prominent organizations like the American Red Cross, American Cancer Society, and Make-A-Wish Foundation ^[21]. Initially, this option may not maximize point value, but it provides a simple way to support worthy causes while potentially preventing your remaining points from expiring due to inactivity ^[22].

How to Convert Points into Real Money

Beyond traditional redemption options, there are several ways to transform credit card points into actual spendable money. These methods help cardholders extract value from rewards they might not otherwise use.

Sell points through brokers or marketplaces

For those seeking immediate cash, specialized brokers purchase credit card points directly from consumers. Companies like The Miles Market, Cash My Point, and MilesBuyer connect people looking to sell unused rewards with buyers who need them for travel bookings.

The process typically involves three steps: requesting a quote, receiving an offer, and getting paid. Most brokers promise payment within 24 hours after accepting their offer. The Miles Market, for instance, advertises “swift and secure” payment within one business day ^[23].

Note of caution: While selling points isn’t illegal in most countries, it typically violates the terms and conditions of loyalty programs ^[24]. Card issuers may close accounts or confiscate points if they detect such activity.

Use points for purchases via PayPal or Amazon

Major credit card issuers allow cardholders to connect their rewards accounts to PayPal or Amazon for direct checkout payments.

Point values through these services vary significantly by issuer:

• American Express points: Worth 0.7 cents each through PayPal ^[4]

• Chase Ultimate Rewards: Worth 0.8 cents each via PayPal and Amazon ^[3]

• Capital One miles: Worth 0.8 cents each through PayPal ^[3]

• Discover rewards: Worth 1 cent per dollar/mile through PayPal ^[3]

Linking your rewards account is straightforward—most cards can be connected through your online account settings or during checkout. Indeed, using a credit card through PayPal still earns rewards on purchases, making it a double-dip opportunity ^[25].

Turn points into cash via gift card resale

Another approach involves converting points to gift cards, then selling those gift cards for cash.

First, redeem points for gift cards through your credit card portal. Many issuers offer this option at a reasonable value—typically around 1 cent per point ^[2]. Some programs, like Citi Rewards+, actually provide better value for gift card redemptions (1 cent per point) compared to direct cash back (0.5 cents per point) ^[2].

Afterward, sell these gift cards on marketplaces like GCX or CardCash. While GCX charges a 15% fee, CardCash offers up to 92% of cash value ^[26]. Some platforms also allow trading gift cards for Amazon credit at increased values—up to 11% more than cash—providing a practical alternative to direct cash ^[26].

Choosing the Best Redemption Option for You

Making smart decisions about your credit card rewards means finding the redemption option that delivers maximum value for your specific situation. With various choices available, strategic selection becomes essential.

Compare value across redemption types

Selecting the best redemption method requires understanding what your points are actually worth in different scenarios. Credit card issuer programs typically offer more reliable value than airline or hotel rewards programs, plus greater flexibility. General travel cards allow both travel and non-travel redemptions, or transfers to high-value travel partners to maximize rewards ^[27].

Points values vary dramatically between redemption types:

• Premium travel cards boost value significantly (Chase Sapphire Reserve offers 1.5 cents per point for travel bookings) ^[28]

• Cash back redemptions typically offer baseline value (often 1 cent per point)

• Gift cards sometimes feature promotional values exceeding cash equivalents

Consider your lifestyle and spending habits

The right redemption choice hinges on your personal circumstances. Conscious spending means being intentional about where your money goes, including how you use rewards ^[5]. If you’re loyal to a particular airline or hotel chain, you might get more value from that brand’s program ^[28].

When evaluating options, ask yourself:

• Do you travel frequently or prefer cash back?

• Are you willing to research transfer partners to maximize value?

• Is simplicity more important than squeezing out every cent of value?

Watch out for expiration and devaluation

Points are a terrible investment—they don’t appreciate over time ^[29]. Most credit card rewards don’t expire as long as your account remains open and in good standing ^[30], yet co-branded airline and hotel points typically expire after 12-36 months of inactivity ^[31].

More concerning is devaluation—when loyalty programs require more points for the same reward. Programs frequently adjust redemption rates, sometimes with little warning, causing your points to lose value overnight ^[32]. Following an “earn and burn” approach is typically the safest strategy ^[29]. Instead of hoarding points, set clear goals and redeem them as soon as you reach your target.

Conclusion

Credit card points represent real money waiting to be claimed through smart redemption choices. Understanding how these rewards work allows cardholders to transform everyday spending into valuable returns, whether through travel bookings, cash back, or strategic transfers to loyalty programs.

The best redemption strategy depends entirely on your lifestyle and goals. Cash back offers simplicity and guaranteed value, while travel rewards through transfer partners can yield significantly higher returns. Rather than letting points sit unused, actively plan their redemption to protect against potential devaluation.

Remember, points are a rebate on money already spent, not an investment to accumulate. Smart cardholders track their rewards, understand redemption values, and choose options that align with their needs. Through careful selection of cards and strategic use of bonus categories, credit card rewards can become a powerful tool for stretching your budget further.

References

[1] – https://www.chase.com/personal/credit-cards/education/basics/how-to-redeem-credit-cards-rewards-for-gift-cards
[2] – https://www.bankrate.com/credit-cards/rewards/redeeming-rewards-for-gift-cards-value/
[3] – https://www.nerdwallet.com/article/credit-cards/credit-card-rewards-and-paypal
[4] – https://www.forbes.com/advisor/credit-cards/should-you-redeem-your-credit-card-rewards-to-pay-with-paypal/
[5] – https://www.iwillteachyoutoberich.com/best-credit-cards/
[6] – https://www.cnbc.com/select/how-credit-card-issuers-classify-purchases-for-bonus-rewards/
[7] – https://www.bankrate.com/credit-cards/rewards/maximize-credit-card-rewards/
[8] – https://www.cnbc.com/select/best-ways-to-maximize-credit-card-rewards/
[9] – https://www.joinkudos.com/blog/credit-card-reward-point-values-explained-2025
[10] – https://www.thebalancemoney.com/how-to-calculate-your-credit-card-points-4588430
[11] – https://www.lendingtree.com/credit-cards/articles/what-are-credit-card-points-what-are-they-worth/
[12] – https://www.bankrate.com/credit-cards/rewards/how-do-credit-card-points-work/
[13] – https://wallethub.com/answers/cc/most-valuable-credit-card-points-2140845635/
[14] – https://www.nerdwallet.com/article/travel/what-are-travel-points-worth-and-why-do-they-matter
[15] – https://www.cnbc.com/select/worst-ways-to-redeem-credit-card-rewards/
[16] – https://www.experian.com/blogs/ask-experian/worst-ways-to-redeem-credit-card-rewards/
[17] – https://www.nerdwallet.com/article/travel/what-is-statement-credit-travel-cards
[18] – https://www.lendingtree.com/credit-cards/articles/redeeming-credit-card-travel-points/
[19] – https://www.chase.com/personal/credit-cards/education/rewards-benefits/what-is-a-statement-credit
[20] – https://www.bankrate.com/credit-cards/rewards/how-to-redeem-credit-card-rewards/
[21] – https://www.cnbc.com/select/how-to-donate-credit-card-rewards-to-charity/
[22] – https://givingcompass.org/article/donating-points-and-miles-to-charity-benefits-and-drawbacks
[23] – https://www.themilesmarket.com/post/selling-your-credit-card-points-for-cash-guide
[24] – https://onemileatatime.com/insights/how-mileage-brokers-ruin-miles-points/
[25] – https://www.cnet.com/personal-finance/credit-cards/advice/should-you-use-your-credit-card-through-paypal/
[26] – https://www.cnbc.com/select/how-to-sell-gift-cards-for-cash/
[27] – https://www.bankrate.com/credit-cards/travel/points-and-miles-valuations/
[28] – https://www.nerdwallet.com/best/credit-cards/rewards
[29] – https://onemileatatime.com/guides/diversifying-miles-points-tips/
[30] – https://www.experian.com/blogs/ask-experian/do-credit-card-rewards-points-miles-expire/
[31] – https://www.bankrate.com/credit-cards/travel/keep-miles-from-expiring/
[32] – https://www.joinkudos.com/blog/are-your-credit-card-points-losing-value-how-to-beat-points-miles-inflation