Credit Card Points 101: The Ultimate Beginner's Guide in 2025
As a beginner, navigating the world of credit card points can feel incredibly daunting, filled with confusing jargon (“CPP”, “ecosystems”, “RTW”, etc.) and complex descriptions of strategies. For many novices, taking the first step into the world of credit cards and points systems can be too overwhelming even to begin.
Therefore, we at ETA Points have put together the ultimate beginner's guide to credit card points to help you learn how to earn rewards smartly and redeem them for maximum value. Whether you dream of exotic trips or simply want to save money, mastering credit card points can unlock incredible opportunities.
By the end of this article, we hope that you feel confident with all things credit card points and reward systems. With the background out of the way, let’s jump into the guide with the basics!
What Are Credit Card Points?
At the very core, credit card points are a type of reward often offered by credit card issuers (e.g., banks like Chase Bank and American Express).
Every time you use your credit card, you’ll get a small bonus of “points” that can be used for a variety of benefits. In theory, this benefits both parties, as the banks get more users in their system (and therefore more swipe fees/interest) while the cardholders get added rewards/incentives for using the card.
There are generally two common types of credit card rewards:
Cash-back: Cards with cash-back give you a small percentage (~1%) of your spending back to you, effectively making all your purchases slightly cheaper. Cash-back cards are great for individuals who want an easy setup that rewards holders with minimal effort. While simple, cash-back generally returns less value overall, trading maximum value for simplicity and consistency.
Travel Points/Miles: Cards with point-based rewards give a certain number of “points” (each bank calls their rewards something different) for all your purchases, typically ranging from 1-5 points for each dollar spent. Points can be used for a wide variety of benefits (which we will touch on in more depth later).
Among these rewards, transferable credit card points (i.e., points that can be earned with your credit card and then transferred to a travel partner) are often considered the most valuable. These points, earned from premium travel credit cards such as the Chase Sapphire Preferred or the American Express Gold, can be transferred to various airline and hotel loyalty programs, often yielding the highest value for your rewards.
Before we talk about how to use credit card points, let’s talk about the basics of earning them.
3 Ways to Earn Credit Card Points
Earning credit card points is always going to be tied to your spending habits, but there are 3 main methods to utilize:
1. Everyday Spending and Bonus Categories
The Chase Sapphire Reserve point multipliers
Most point credit cards offer a baseline earning rate of one reward point for every dollar spent, with many cards also featuring added rewards on "bonus categories", with the most common being dining/food and travel.
For instance, a top travel rewards card might offer 4x points per dollar spent on eligible travel-related purchases, such as flights or hotel stays, on top of the 1x points per dollar spent on all other purchases. The Amex Platinum Card, for example, offers 5x Membership Rewards points per dollar spent on flights booked directly with airlines; for every dollar you spend on a flight, you get 5x the return in points (e.g., $1,000 returns 5,000 points).
Given that spending is so intrinsically tied to earnings, choosing a card that aligns with your personal spending habits is crucial. Similarly, high spenders will naturally earn more credit card points; just be sure to never spend outside your means just to earn points.
If you are new to credit cards, consider checking out our credit card tier lists for Chase Bank, American Express, and Capital One as a starting point.
2. Welcome/Sign-Up Bonuses
The AmEx Platinum sign-on bonus homepage
Credit card companies frequently entice new cardholders with generous introductory offers, often called welcome bonuses or sign-up bonuses. These are often regarded as the holy grail of point earning, and are earned by meeting a certain spending minimum within the first few months of opening the card account.
Instead of slowly earning points through spending, cardholders instead receive a sizeable influx of points once they meet the minimum spending requirement.
Pro-tip: Many credit card sign-up bonuses are only earnable “once per lifetime”; once you earn the bonus, you will likely never be able to earn it again.
For example, the Capital One Venture X offers new cardholders a welcome bonus of 75,000 Capital One miles after spending $4,000 on the card within the first three months of getting approved. To get the same volume of points from spending normally, an individual would have to spend $37,500. That’s a $33,500 lower spending requirement just for being a new cardholder! Capitalizing on these offers can therefore dramatically boost points balance without having to spend huge quantities of money.
You’ll often hear of credit card pros using a strategy called “churning”, where they will apply for many new cards in a short period of time, accumulating massive quantities of points through sign-up bonuses. While frowned on by most of the major card providers (i.e., the banks), many groups utilize this practice today, which you can read more about on forums like Reddit.
3. Referral Bonuses
The basics of Chase credit card referrals
Finally, many cards offer bonuses to existing cardholders who successfully refer friends or relatives to apply for the card. Referral bonuses are another excellent way to earn extra points without any additional spending. If you’ve ever had a friend bug you to use their referral code to get a new credit card, this is the driver—it’s easy to get a free 10,000+ points just for having a friend get approved for the card.
However, it’s important to know that referral bonuses are often considered taxable income, and you can be given a 1099 form if you accumulate lots of points in referral bonuses each year. Regardless, referrals are still a great way to earn additional reward points.
Summary
It is hopefully clear that, to maximize your earnings, you should be using the card(s) that offer the most points for the types of purchases you make most frequently. For some, this means a single card for all spending, while others will prefer to have a unique card for each major spending category (e.g., one card for gas, another for groceries, a third for dining out, etc.). Determining which strategy works best for you will come with time and experience, so we recommend starting with one.
Now that we’ve covered earning points, let’s talk about the fun part: how to use them.
How to Redeem Credit Card Points For Value
If you use your points wisely, you can stay at incredible destinations like Park Hyatt Kyoto without paying a thing!
Redeeming your points is where you get to truly enjoy the fruits of your smart spending. The value of your points can vary significantly depending on the redemption option you choose, so understanding your options is key to getting the maximum “bang for your buck".
When talking about points, we often use the phrase “cents-per-point”, or “CPP”. To calculate the CPP, simply divide the cash price by the equivalent number of points; if a flight would cost you $1,000 or 50,000 points, that would net to 2 cents per point ($1,000/50,000 = $0.02 = 2 CPP). We will use this metric as a guide for exploring the options when it comes to using points.
Credit card offerers all give roughly the same options for redeeming points. For instance, American Express has the following:
Let’s break these options down in simple terms:
1. Transfer/Convert Points
Almost universally, the best way to get value out of your credit card points is by transferring them to “travel partners”, such as a hotel chain (e.g., Hyatt Hotels) or an airline (e.g., United Airlines). When you transfer a credit card point, you are converting said point into a reward point of an airline/hotel.
The advantage of transferring your points to travel partners is that the airline/hotel will almost always offer you the greatest value for your points, especially if you are willing to put in a bit of effort to find a good deal.
For instance, take the same hotel listed on both Chase’s Travel Portal and Hyatt’s website:
As you can see, the same Hyatt hotel room on the same dates at the above property goes for ~11,000 points on the Chase Portal (left) but only 6,500 points directly through Hyatt (right), almost 50% cheaper. While not always the case, booking directly through the airline/hotel will normally give you more value for your points than booking through any travel portal (such as in the above example).
Pro tip: Aim to get at least 1.5 cents per point on any airline bookings and at least 2 cents per point for hotels; otherwise, we generally recommend paying the cash price instead (though this does vary).
However, the beauty of transferring points is that you can occasionally find aspirational value at luxury properties and on first-class flights. For instance, at hotels like Alila Kothaifaru Maldives or Park Hyatt Kyoto (both Hyatt properties), you can easily get 5+ cents per point; both of these hotels often charge $1,500+/night, but set their reward bookings at only 30,000-40,000 points!
It’s important to note that each bank has a distinct list of transfer partners; if you like a particular airline or hotel, consider getting a credit card that has that airline/hotel as a transfer partner. It will take some exploring to figure out which hotels/airlines offer the best return for your travel, but in general, three of our favorites are World of Hyatt, Virgin Atlantic, and KLM/Air France’s Flying Blue.
Transferring points is typically a one-way transaction and can almost never be reversed, so be sure to wait until you are ready to book before transferring points.
2. Booking Travel Through Credit Card Portals
If transferring points seems too complex or you’re limited on time, using your points to book travel through your credit card's dedicated travel booking portal is typically the next best option. Some cards offer redemption bonuses when booking travel this way; for instance, Chase credit cards give a “Point Boost”, which increases the value of points used for certain hotels/flights when booking through the portal.
To use an example, a booking at Carmel Valley Ranch on the Chase portal would typically start at ~47,000 points per night. However, with the Points Boost, this drops down to ~39,000 points per night, saving you 9,000 points for each night.
However, booking through these portals functions similarly to booking on a service like Expedia or Kayak (i.e., a third-party service). While they are convenient, if you have any issues during your travel, it is going to be much more difficult to get them resolved than if you had booked directly with the hotel/airline. Plus, the value is almost always capped; it is very unlikely you will get any additional value out of your points by booking through a travel portal compared to transferring the points directly.
While using the credit card travel portal is not typically our preferred method for redeeming points, it can give decent value and is exceptionally simple; therefore, it has its place in the points world, especially for those who value convenience and do not want to invest lots of time in finding direct booking availability.
3. Using Points for Statement Credits
A third way of using credit card points is by redeeming them for a credit against your card statement. Almost universally, converting points into cash/statement credits will be at a flat rate of 1 cent per point (see example below).
Redeeming points for cash-back on Chase
We very rarely recommend using your points as a statement credit, as it dramatically caps the value of your points. However, if you need cash or have no plans of travelling soon, this is a reliable way of getting a guaranteed return on your hard-earned points.
4. Using Points for Gift Cards
The final common channel for spending points is redeeming them directly for gift cards through the bank/card offerer.
Redeeming points for gift cards will largely never return more than 1 cent per point, and often will yield even less. Unless you are buying the gift card for someone else, there is almost no reason to ever redeem your points for gift cards, as redeeming points against your statement will give the same value with added flexibility. Therefore, unless there is a particular deal you are chasing (which are offered occasionally), use the other options on this list.
Common Beginner Questions
Below, we’ve included some common questions we often get from newbies to the points space:
Is it worth saving up for big points rewards or using the points as I get them?
This almost always comes down to personal preference. If you’re someone who values the idea of aspirational trips and experiences (e.g., flying in first class), we recommend saving your points up for the big redemptions. However, we know credit card pros who will use their points for short economy flights, saving them lots of cash in the long run. Plus, you never know when a points system will get devalued, so never hold on to points for too long.
Can I transfer points back to my credit card after I’ve transferred them to a bank/airline?
No, these transfers are almost always one-way.
Are “points” and “miles” the same thing?
Yes. Typically, credit cards and hotels will refer to their rewards as “points”, while airlines will typically refer to their rewards as “miles”. However, there are many exceptions; Capital One refers to its rewards as “miles” despite being a bank.
Are points valuable if I don’t travel a lot?
Yes. Even if you travel only once a year, that still represents a great chance to take advantage of all the points you’ve saved up. Plus, even if you don’t travel, you can always redeem your points for statement credits, effectively making them cash-back cards.
Should I carry a credit card balance just to get points?
Absolutely not. Under no circumstances should you ever spend outside your means just to get more points.
What is a card “ecosystem”?
Ecosystems are just an umbrella term to refer to all the cards, points, and aspects of a particular bank, airline, or hotel. For instance, all the various credit cards Chase offers are included in the “Chase ecosystem”.
Do credit card points expire?
This varies dramatically depending on the credit card, airline, or hotel chain. Make sure to check the details for each program.
What is considered a “good” value for points?
This often comes down to the type of booking you are making. While it can vary dramatically, we recommend looking for >1.5 cents-per-point for flights and >2 cents per point at hotels. However, there are many times where these rules are not relevant, such as if you are booking a particularly cheap flight/hotel stay (points tend to be more valuable for more expensive flights/hotels).
How do I calculate the CPP (cents-per-point) value of my booking?
Simply take the cash price, divide it by the number of points, and multiply it by 100 for easy reading. For example, for a flight that costs $500 or 25,000 points, we would do (500/25,000)*100 = 2 cents per point.
Conclusion & Next Steps
The world of points and miles is an exciting one, full of unique opportunities and amazing returns; however, learning the ropes of the various systems and strategies takes time. Even if there is a long road left to becoming a points master, knowing the basics of earning and redeeming credit card points represents a major step in the right direction.
For next steps in your learning, make sure to check out the following articles:
We’re always happy to give tips to newbies in the credit card space, so please feel free to leave any questions in the comments below!
