What Are Credit Card Reward Points & How Do They Work?

Credit card reward points are a type of currency distributed by a card issuer that can be redeemed in exchange for merchandise, cash back or statement credits.

The way you earn and redeem credit card reward points can differ depending on the credit card, the credit card issuer, and their conversion rate. But learning the ins and outs of credit card rewards doesn't have to be complicated! We're breaking down how reward points work, when you get credit card points, and how you can redeem them.

How do credit card reward points work?

Credit card points are typically earned through a designated rewards card. While the system through which points are earned may vary, a common way for issuers to set up points is through tiered spending categories that offer a certain amount of points for purchases made. For example, some cards may offer 2x points for supermarket spending and 3x for gas stations, and others may offer 3x points for travel spending such as car rentals or hotels.

An issuer may offer several rewards cards with different tiers of accelerators to suit card members’ preferences. Be sure to check how many points your rewards card earns in specific spending categories before applying.

How do you redeem credit card rewards points?

Typically, you can redeem rewards points through your credit card rewards redemption platform. These platforms may allow you to select merchandise or services on their website and use points as a payment option. In other situations, such as with an issuer’s affiliated partners, you may be able to use your card’s reward points as a payment option at checkout.  If you're using a Citi credit card, it's possible that you're earning what we have aptly named ThankYou® Points. Through the Citi ThankYou Rewards loyalty program you can redeem these points in numerous ways, including on flights or other travel, shopping, and cash back.

What are credit card points worth and what can you redeem reward points for?

How much a credit card reward point is worth depends on how it is redeemed. The best way to figure out your credit card point value is to do the math: take the dollar value of whatever you're redeeming rewards points for and divide it by the number of points needed to get it.

You may be able to redeem your credit card rewards points for airfare, hotels, car rentals, gift cards, shopping, statement credits, and more. Check your card’s rewards policy to see all of your options for points redemption.

What is a credit card rewards rate?

A credit card rewards rate is the number of points you'll earn for every dollar spent. Many rewards points credit cards are designed to help you earn rewards points faster with accelerators on certain categories. Some rewards points credit cards are designed to help you accrue more credit card reward points at higher rates in certain categories like travel so you can redeem them faster. For instance, with the Citi Premier® Card you earn 3X points on restaurants, supermarkets, gas stations, air travel and hotels.

When do credit card reward points make sense?

Planning your wedding? Big, one-time expenses will help you earn credit card reward points you can use towards travel for your honeymoon. Have a long commute and need to buy gas twice a week? Your regular expenses could also earn you rewards points.

All of life's moments, big and small, are the perfect opportunity to earn credit card reward points. Finding the right rewards credit card for you will help you earn credit card rewards points on purchases that you're already making, so that you can redeem them for something that is valuable to you. Additionally, bonus offers from your credit card issuer will help you accrue rewards points faster, so make sure to pay attention to any available bonus offers from your issuer after applying for a card.

Things to consider when it comes to credit card points

There are a few key things to remember when you sign up for a rewards credit card:

  • For most cards, only purchases earn rewards points. Balance transfers, cash advances, interest fees, and other non-purchase charges typically won't earn credit card points. Each credit card is unique, so double check your terms and conditions for more information.
  • Promotional bonus offers usually have an expiration date. Read the fine print to know when your offer to earn more credit card rewards points expires and what you need to do to earn your bonus.
  • Select merchants might offer higher rewards rates or better credit card point values. Check with your credit card to see which ones are best for you.
  • There might be a cap to how many credit card rewards points you can earn in a category or redeem at a time - again, check your terms and agreements for more information.
  • Rewards points will typically appear in your rewards account if you continue to pay at least the minimum due on your credit card.
  • The credit card rewards program that's right for you is out there. Start your search with Citi credit cards.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

Additional Resources

  • Utilize these resources to help you assess your current finances & plan for the future.

  • Learn how FICO® Scores are determined, why they matter and more.

  • Review financial terms & definitions to help you better understand credit & finances.