Rewards Cards: Put Those Points to Work

Sign-up bonuses, lounge access, cash rebates, free hotel rooms and plenty of fine print: The dizzying promotions and Byzantine rules on earning and redeeming points with rewards credit cards can make your head spin. Here are some ways to cut through the confusion and get the most out of them.

Rewards cards offer three types of value. There is typically a sign-up bonus, up to 120,000 points or miles after spending a minimum amount within a certain period. Then there are the points, miles or cash back you receive for spending with the card, sometimes multiplied for purchases in specific categories like travel, dining or fuel. Last, there are the benefits you receive as a cardholder, like credits for the Global Entry or TSA PreCheck application fees, access to airport lounges, and elite status at hotels.

Travelers should weigh the rewards against the annual cost of a card, which can range from zero to $695, and which airlines, hotels and other travel partners it works with. To get the best value, pay off the total balance each month to avoid interest charges. Autopay is your friend.

Make partnerships work for you

A co-branded card, like the Alaska Airlines Visa Signature (fee $95), helps you achieve status faster with that airline. Cards co-branded with airlines may also offer perks like priority boarding, free checked bags and lounge access — a plus if you tend to fly on one carrier. The Alaska card offers a $99 companion ticket (plus taxes and fees) each year when spending requirements are met. Hotel chains offer similar co-branded cards. The World of Hyatt Visa and Marriott Bonvoy Boundless Visa (both $95) give cardholders one free night, at their low- to midtier brands, on the anniversary of the customer’s sign-up.

If you choose a card that’s not co-branded, you can sometimes transfer your points to your preferred airline’s loyalty program. For cards that don’t have partnerships with certain airlines, you can often use code-sharing as a workaround. For example, Capital One does not allow you to transfer your points directly to Delta SkyMiles. To book a seat on a Delta flight, transfer your points to Aeromexico — which Capital One does have a partnership with — then use those points to book a code-share seat on Delta through the SkyTeam alliance.

Stretch points into pennies

Redemption values can change depending on how you use your points, said Gary Leff, of the travel site View From the Wing. His advice: Explore the variety of ways you can redeem them and aim to get at least one penny per point. Citi ThankYou points are usually worth a penny when buying gift cards from a variety of retailers. American Express cardholders will get 1 cent per point when they’re using their Membership Rewards balance to purchase an airline ticket or a hotel room on the Amex website — and some also earn five points per dollar spent. For example, a $500 room booking will cost 50,000 points, but earn 2,500 points, worth $25, for buying it through the website.

Those same Amex points are worth only about 0.7 cents if used to make a purchase on Amazon and 0.6 cents if used to pay for eligible purchases on your monthly statement. Credit card websites typically have a section detailing redemption values.

Sometimes, points can exceed 1 cent in value if you transfer them to an airline loyalty program to buy a ticket, Mr. Leff said. And keep an eye on travel websites, social media and your email inbox for temporary transfer bonus offers, which can give you an additional bump of up to 30 percent on points you are moving to a specific airline or hotel partner.

Save big expenses for new cards

Tempted by a hefty sign-up bonus? Wait until you’re planning a big vacation, doing a home renovation, or paying college tuition or another large expense, advises Kylie Queisser, who offers travel advice on TikTok. Then use that big expense to meet the minimum spending requirement for the bonus. The Capital One Venture X Visa card ($395) offers 75,000 miles after spending $4,000 in three months. The Citi AAdvantage Executive World Elite Mastercard ($595) offers 100,000 points for spending $10,000 in three months.

Bonus amounts like those can be significant: 75,000 Capital One points can be redeemed for $750 in travel spending; 100,000 American Airlines miles could buy several cross-country plane tickets.

Play to each card’s strengths

If you don’t mind a little juggling, tailoring individual cards to specific purchases can maximize benefits. For example, pair a Chase Sapphire Reserve card ($550), which earns three points per dollar on travel and dining expenses, with a no-annual-fee Chase Freedom Unlimited card, which earns one and a half points per dollar, for everything else, Mr. Leff suggested. “There are similar ways to pair American Express cards and Citibank cards,” he said.

So how do you keep track of which one does what? Easy, Mr. Leff said: He puts little stickers indicating restaurants, gas, groceries or other categories on each of his family members’ credit cards.

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