Points and How to Use Them
Think of Credit Card Points as Another Currency
There are generally 3 types of points you can earn from credit cards: partner-specific points, bank-specific points, and convertible points. These points can be spent like money to travel or like currency exchange to convert to US dollars.
The first category, partner-specific points, are points that you earn through the use of a credit card that are automatically deposited into a partner reward account. These can range from airline miles to hotel points and redeemed through their respective partner accounts. Their redemption follows the same rules as regularly earned points or miles. For example, The Chase United branded cards will deposit United frequent flyer miles into your account that can be used for free flight redemptions with United or other star alliance airlines.
The second is less common and typically used by smaller banks comparatively, but they still very much have a place in your wallet. These are bank-specific points or miles. Don’t let the name confuse you, whatever your bank calls them they are generally redeemed as statement credits for travel purchases. These points will have a set dollar value per point and then you can select travel purchases already made on your card to essentially cancel out with your points. For example, the US Bank Altitude Reserve card will offer you a 50k point sign up bonus redeemable for $500 in cashback (or $750 if you book travel through their travel portal).
The third and most lucrative category are convertible points. These points combine the best of both worlds and let you either redeem for cash back (although typically at a value of 1 cent per point or less), redeem through a bank-specific travel portal, or transfer to partner accounts. The values vary and are worth more depending on your travel or financial needs but generally, Chase has the best rewards program, followed closely by Amex and finally Citi. Notably, Marriott Bonvoy points fall into this category and have the most transferability of any point system out there, but are not worth as much in the transfer.
If you don’t have any specific travel plans or want to focus on getting cashback, stick to the convertible points. They offer the greatest flexibility and are obtainable from numerous cards per bank. If you have a specific vacation or travel in mind then plan your trip, figure out how many points would be needed and focus on cards that can make that trip free and in business class seats to boot!
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