Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
Credit card points are the rewards users earn with certain credit cards. Although they're often referred to simply as "points," there are multiple types of card "currencies"—so a card may offer points, miles or simply cash back. And one point or mile from one card isn't necessarily worth the same as one point or mile from another card. This means comparing credit cards and their rewards isn't so easy. In this guide, we go over how to arrive at the value of credit card points and how that can be used to calculate something called a "rewards rate."
What Are Credit Card Points Worth?
The value of a credit card point depends on how it is spent. For example, using credit card points to book travel may provide greater value than exchanging those points for cash back. On average, cardholders can expect to receive about 1 cent per point, although this can vary from card to card. Cardholders should know how much their points are worth and choose rewards programs accordingly. For example, some cards may provide the best deals for cash back, while others may excel at travel rewards.
To calculate the value of a single point, divide the dollar value of a reward by the points needed to unlock it. For example, if it takes 80,000 points to pay for a $800 airline ticket, the value of those points is 1 cent each ($800 / 80,000). When you're not a cardholder, finding exact redemption details can be difficult. One option is to call the card issuer and ask for a few examples of how you'd be able to redeem points. The information can also sometimes be found on the issuer's website.
Redemption Total Value
|10,000||Cash Back||$100||1 cent|
|10,000||Gift Card||$100||1 cent|
Note: Sometimes the value of points at one issuer depends on what credit card you get. That is because some banks, like Citibank and Chase, provide different redemption options for different credit cards—even though all of their cards fall under the same rewards program.
Credit Card Rewards Point Comparison and Ranking by Issuer
We analyzed the value of credit card points across the major U.S. credit card issuers. Generally, cards offered by JPMorgan Chase came out on top. The Chase Ultimate Rewards points are worth up to 1.5 cents each with certain cards in the program. Note that Chase, American Express and Citibank allow certain cardholders to transfer their points to participating airline or hotel loyalty partners. Calculating the value of these redemptions is a bit more complicated, so we left it out of our analysis. If you're interested in a specific program and its redemption values, including airfare and hotel point transfers, we recommend checking out our full guides to the programs.
Credit Card Points
Estimated Value Per Point
|Chase Ultimate Rewards|
|American Express Membership Rewards|
|US Bank FlexPerks|
|Capital One Miles|
What is a Credit Card Rewards Rate?
A credit card rewards rate is a metric used to determine how rewarding a credit card is on certain purchases. It is most often expressed as a percentage return on every dollar spent. For example, if a credit card has a flat 2% rewards rate, that means cardholders get a 2% return on every purchase they charge to that card. The rewards rate is equal to the rewards point value times the point-earning rate. Example: Say a credit card earns 2 points per dollar spent. If each of those points is worth 1 cent, the rewards rate is said to be 2 x $0.01 = 2%. If you want to calculate the overall rewards rate based on how much you spent, divide the value of the points you earned by the amount of money you spent to get them.
A net rewards rate is a slightly more complicated metric that also factors a card's annual fee into the result. Though it is more difficult to calculate, the net rewards rate is the most accurate representation of the value a credit card holds for those who continually use it. To calculate it, the cardholder should subtract the annual fee from the value of points earned in a single year. That figure should then be divided by the total amount of money spent on the card to earn said points. See our example below.
Net Rewards Rate
A rewards rate is useful because it helps consumers compare a points-based rewards credit card to other cards, including cash-back cards. It effectively reduces rewards to a common denominator, which allows for quicker comparison. For example, it may be difficult to know whether a card that awards 3 points per dollar spent is better or worse than a card that awards 2% cash back. However, if we know the first card has a 2.5% rewards rate, then we can confidently say it is better than a 2% cash back card—assuming all other things are equal.