Are Points Pointless or Valuable? Credit Card Incentives Unmasked

by Redeeming Riches on April 25, 2014

When it comes to credit cards, scoring points is the name of the game. You don’t score points if you don’t spend money. And, sometimes, the points can be at least as valuable as what you happen to be charging to the card. Here’s how point work, and how to decide whether or not the points are worth the effort.

Common Points Programs

  • The frequent flyer mile. This is one of the more common types of points out there. Credit cards will sometimes give you credits towards a plane ticket. Cool huh? The frequent flyer miles rewards program varies by card and company.
  • Merchandise rewards. Some credit card issuers will reward you with discounts through preferred venders. You spend money with your card, and you earn points good for merchandise through select retailers.
  • Booking travel reservations. Some cards let you accumulate points for travel. You can book hotels and other lodging accommodations. This is good if you happen to travel a lot.
  • Cash back rewards. This is the mother of all rewards programs. You get cash back for all your purchases. Usually, it’s between 1 and 5 percent, with an annual cap ranging from $500 to $1,000.

How To Use Rewards Programs

Some credit card tips go against the grain, and that’s true when they happen to come from New York Times best-seller Ramit Sethi, author of I Will Teach You To Be Rich. Sethi advises people to charge up their credit cards with everyday items.

When you go to buy gasoline, or pay your utility bills, use your points card. Why? Because you’re going to accumulate points with it, of course. Also, you’re more inclined to pay off the balance every month. Since these bills are reoccurring, you can probably already afford them. So, maximize the benefit of them by charging everything and paying off the balance at the end of the month.

If you’re lucky enough to have a cash back credit card, use it to help pay off your monthly bills, or put the cash back toward your savings.

Are They Worth It?

Whether a points card is worth it or not depends on your unique situation. If you travel a lot, a travel rewards program might be worth it. If you don’t travel, a travel card is going to be wasted on you. Almost everyone can use cash, so a cash back reward program will benefit most people.

But, even then, you have to be committed to paying off the bill. If you know you aren’t financially responsible right now, be honest with yourself, resist the temptation to get a card, and start paying cash for everything.

That doesn’t mean you should never use credit cards. Rather, it means you should work on becoming more responsible Create a budget, create realistic and attainable goals for yourself, and start taking on small loans when you can pay all of your regular expenses on time, or even early, for at least a year.

When you’re ready, reassess your life, and get a points card that you think will benefit you the most. Try it out. You’ll know pretty quickly if it’s right for you.


Karen Swain has a knack for personal finance. Whether it’s budgets or investing, she enjoys blogging about the basics to smart money management.

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