How do Different Credit Card Points Work?

With competition amongst big banks as high as ever points from credit cards are a reward system used to convert potential customers into actual ones. Credit card companies want consumers to use their cards so that they can make money on merchant fees, and as incentive for doing so some of them offer rewards for doing so. In this post we will look and see how these rewards vary both in terms of accrual and redemption.

What Are Credit Card Points

Generally speaking a credit card point is one which you earn from spending a single dollar on a card. Depending on the card, these points can be used for cash back, travel, merchandise, and more. The reason such points exist is that credit card companies want to entice people to use their services. By doing this, they encourage their customers to not only take out their credit cards (rather than going with a competing lender) but also to actually use the card on a regular basis – which is of course how they profit from them.

These companies can therefore afford to strike a deal with airlines, wholesale stores, and more to provide co-branded products. Examples of these types of products include; Chase’s Visa, Citi’s AAdvantage Visa, and Amex’s Delta Gold card. The credit card partners meanwhile get paid by the banks themselves but also have the advantage of free advertising and more customers using their business – much like the way coupon companies work.

Type of Credit Card Points

There is more than one type of credit card point and this is something to consider when you take out your credit card or decide how you are going to shop.

Specifically, there are three main types. These are:

Fixed Value Points

These are points that will always be worth a certain value and that won’t fluctuate at any time. You know what you’re getting but there’s also no chance of them being worth more. A good example of a fixed value card is the Capital One Venture Card. With the venture card you’ll earn 2 points per $1 spent. These points are then valued at $0.01 each and can be redeemed for travel by way of a statement credit. So for example if you spend $300 on an airline ticket, you can then use 30,000 venture points to effectively eradicate that charge from your bill.

Transferable Points

These are points that stay in a central pool and can then be transferred to the participating airline or hotel transfer partner. You’ll then be abiding by the rule of that program and what this means, is that you may get more or less for your points depending on which travel plans you decide to go ahead with. On the positive side though, this gives you much more option with regard to how you choose to spend your points and means that you can select a lot more different destinations. An example of a transferable points scheme is the American Express Membership Rewards program. You can earn Membership Rewards points on a variety of Amex cards. Once you do, you’re then able to transfer those points to 15 different airline and hotel partners. Of course, there are other redemption options for MR points but transferring tends to make the most fiscal sense. Accruing this type of point means that you’ll have a lot of flexibility when it ultimately comes time to redeem your points.

Co-Branded Cards

These cards will deposit the points directly to a particular airline and hotel program as you shop. For example; the Delta Platinum Amex earns 1 SkyMile per $1 spent on the card and then those points are automatically deposited into your SkyMiles account. Generally speaking this is a pretty low value proposition because it; A. Locks you into a single program and B. 1 point per $1 is pretty low when you consider the fact that many other cards offer bonuses which allow you to earn 2, 3, 4, or even more points per single dollar spent. All that being said, these types of cards generally come with other benefits such as free checked bags on an airline, or free wifi at hotels, which makes them worthwhile. We will cover these types of benefits in another post.


Each type of rewards card is going to have its own set of positives and negatives. Ultimately the decision about which card to sign up for should come down to you, your personal spending habits, and your personal travel goals/plans. For example; if you’re someone who flies infrequently and always in coach then something like the Venture card from capital one might be perfect for you. If you put all of your spending on that card you can easily put together a solid once a year vacation just using those points.

If however you’re someone that travels a bit more frequently and first class is something you value then transferable points are typically the way to go. With those types of points you can generally redeem them at a value that far exceeds the $0.01 per point that the venture card can offer. Finding those types of redemptions requires a bit of digging but its far from impossible.

Finally, as was alluded to earlier co-branded cards tend to have benefits that extend beyond pure points. There are many cards that offer airline lounge access, others that offer elite status qualification, and more still that offer free checked bags.

The Delta Reserve Amex offers free lounge access.
The Delta Reserve Amex offers free lounge access.

Where to Go From Here

If you’re brand new to points and miles then it may behove you to go the co-branded and/or fixed value route simply because of their simplicity. If you’re willing to put in a bit of time to understand transferable programs however then you’ll generally find them to be more valuable over the long haul. If you’re having trouble deciding which card to get feel free to reach out! We currently offer free consulting at where we’ll send you a simple questionnaire to help determine which card(s) is best for you.


What cards are in your wallet? Which type of card do you prefer and why? Let us know in the comments below or reach out on Twitter!

Written by Peter

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