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 benefits including merchandise or cash back in the form of statement credit, direct deposit or check by mail. 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.

While the reward options mentioned are common, there are other potential redemption opportunities based on the specific card you use. 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 your points redemption options.

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. For instance, with the  Citi Strata Premier® Card, you earn 10x points on hotels, car rentals and attractions booked through CitiTravel.com and 3X points on air travel and other hotel purchases, restaurants, supermarkets, gas stations and EV charging stations.

When do credit card reward points make sense?

Planning your wedding? Big, one-time expenses may help you earn a significant amount of credit card reward points, which you might use on flights, hotels, or other expenses to make your honeymoon more affordable. Even routine expenses, like filling up your gas tank for your commute, may help you accumulate reward points over time.

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

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 and account 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 have important conditions. If you have a promotional bonus offer, 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 those bonus points.
  • Select purchase categories might offer higher rewards rates and some redemption options may have better credit card point values. Check your credit card terms to learn more.
  • If you travel frequently, check if your credit card charges foreign transaction fees, as they can offset the value of any credit card rewards you may earn on purchases when using the card abroad.
  • 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.

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