Credit cards may come with high interest rates, but they can also come with perks. With just one swipe or tap, that big purchase can cash in points — meaning big savings for consumers.
"The concept of a credit card point, it kind of depends on the type of rewards card you're carrying," said Sara Rathner, a credit card expert at NerdWallet.
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WATCH HERECredit card points are a type of rewards currency that can be earned in exchange for eligible spending.
"Typically, we see a value of about one cent per point," explained Rathner. "When you redeem for cash back, what you're doing is requesting either a statement credit, which is essentially a discount off of your next credit card bill. Some credit cards will allow you to request a direct deposit of your cash rewards into a bank account. They might even mail you a check."
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"It is hard to pinpoint exactly how much you're going to get for your points," Rathner said. "At NerdWallet, we do have valuations that can help you see what typical values for those points might look like. But again, it does depend on so many factors, which is why it can be so complicated."
One way to get the most points is by redeeming for high-value options like travel.
"There are so many variations in the types of cards there are and the types of point values you'll see depending on how you choose to redeem your rewards," said Rathner.
Hotel points can be used to book rooms and airline points allow travelers to redeem their miles for flights and other expenses associated with flying.
"What you can get for your points might fluctuate based on the season when you're traveling. Obviously, there are certain high seasons and low seasons," explained Rathner. "It also depends on where you're going. Is it a domestic flight or an international flight? And if it's international, how far away is it? What continent are you going to?"
Credit card sign-up bonuses are a fast way to rack up rewards. Consumers typically need to spend a certain amount within a limited period of time. But Rathner cautions those sign-up offers should be used wisely.
"If you have credit card debt right now, don't chase rewards, because the interest rate that you're paying on your credit card debt is going to wipe out the benefit of any points and miles that you earn, probably within just a few months," Rathner said. "This is the time to concentrate on paying that credit card debt down as aggressively as you can until it is gone. Once it's gone and you're able to stay out of debt for the long-term, that's when you can begin to shift your focus to these rewards credit cards to see if there's one or more credit cards out there that would fit your life as it is debt-free."
