All you need to know about credit cards rewards

Basic credit cards get you started. But once you’re on your way to building solid credit (reminder on what counts as solid credit), you could be ready for a rewards card. If you can understand how to choose the “right” card, you can actually make money with some cards through cash-back, points, and miles.

Q: What are “rewards cards”?

There are two main types:

Q: Which rewards are better?

It depends entirely on what suits your lifestyle! Cash-back is the most flexible. But if travel is your version of a best life, a travel card is the way to go because the points/miles you earn could go farther than cash-back, when you redeem them for travel.

Making it real… A single point generally equals $0.01 (so 10,000 points equals $100). But if 10,000 buys you a $200 plane ticket, each point is essentially worth double.

Travel cards also often come with other perks like access to airport lounges, and credits toward checked bags, TSA Pre✓ and Global Entry.

Q: How do I earn points/miles?

By spending on your credit card. Different cards earn points at different rates. For example, some cards have a 1:1 ratio (1 point/mile for $1 you spend) while others have a 2:1 (or more) ratio if you buy something specific (United might give you more points for every dollar spent on a United flight).

You can also often earn points through sign-up bonuses. It’s an offer where credit card companies give you a super-charged amount of points/miles in one shot IF you spend a certain $ on the card within a specific time frame. For example, you might earn 50,000 points if you can spend $3,000 in the first three months of having the card. You shouldn’t see this as a challenge to go buying things you don’t need just to earn the bonus!

Q: How do you redeem points, miles or cash-back?

When you’re signed in to your online credit card account, you’ll see the points, miles or cash-back you've earned. You’ll have the option to redeem it in several different ways, including:

✈️ Flights, hotels or rental car bookings

💳 Cash (a statement credit or direct deposit into your bank account)

🎁 Gift cards

With airline or hotel credit cards, you can only use your points and miles on their flights/properties. Points from general-purpose travel credit cards not tied to one brand are more flexible.

Q: Why do people have multiple credit cards?

To take advantage of different types of rewards. You might want a cash-back card that gets 2% cash-back on restaurants that you only use eating out, an airline credit card you only use for booking flights, and a hotel card you use for booking hotels.

Credit card companies are constantly thinking of seemingly great rewards to attract YOU. Make sure the rewards are the right fit for your lifestyle. And if you’re a MoneyGirl, you’re on your way to being smarter than average about these ploys.

PSA: Avoid applying for multiple cards within a short time frame — it’s a bad look for your credit score.