What Type of Credit Card Rewards Are Best for You?

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Ever been burned when you couldn't redeem your frequent flier miles for the rewards you'd been promised? Maybe you should avoid the airlines altogether.

I review dozens of credit card offers each week to find the best deals. My goal is to help you use credit cards to build and protect your money and credit. Check out more on our credit card page.

A recent article in National Geographic Traveler graphically depicts how airlines make money from their frequent flier programs – often at the expense of travelers – with loyalty programs that “have become an unwinnable game” due to changing awards, expiration dates, requirements and seat availability.

What can you do? One option is to avoid airlines altogether and earn bonus points with credit cards .

Banks have created their own rewards systems that fall into two categories:

  1. Those with points that can be redeemed only for a fixed value. For instance, you get 1 point per dollar you spend, and you can trade in those points only for a limited number of items – say, gift cards and statement credits.
  2. Those with flexible options that let you transfer points into other programs. For instance, your bank-issued credit card might let you swap your points with an airline that runs an entirely different program.

Tomorrow, I’ll look at those programs with flexible points – which offer great deals but require more of your time and energy. The programs with fixed points are much easier to handle, but the savings are a little less. If that latter option sounds more convenient and appealing, let’s figure out which fixed-point program is best for you…

1. Capital One Miles

With cards like the Venture Rewards, you earn double “Miles” in Capital One’s program. These miles are worth half a cent each when used for cash back or gift cards, or 1 cent each when used as a statement credit against any travel-related expenses. In short, because of the double miles, you’re getting 1 percent cash back on non-travel purchases, but 2 percent back on travel-related expenses.

Get it if: You’re sick of airline miles with complicated restrictions, and you just want travel-related statement credits worth 2 cents in value for each dollar spent – essentially 2 percent cash back.

Forget it if: You don’t leave home all that often, so you can’t use the statement credits for travel expenses.

2. Citi ThankYou Points

Citi’s ThankYou points are given to holders of the  Standard Citi ThankYou card and several other products. As a fixed-value system, points are worth as little 0.63 cents each toward cash back – or as much as 1 cent each toward loan repayments or gift cards. Rumor has it that this program will soon allow customers to transfer points to miles with British Airways, Singapore Airlines, and perhaps others. We’ll see, and I’ll tell you as soon as I learn anything. Fortunately, holders of the Premier version of this card can redeem points for 1.33 cents in value toward airfare booked through Citi’s travel agent.

Get it if: You qualify for their Premier card, which means your points are worth more when used for airfare.

Forget it if: You just want cash back.

3. Bank of America WorldPoints

Here’s yet another point system from a major bank that boasts of all sorts of cash back, travel, and gift card redemption options. But points are worth a maximum of 1 cent each – and significantly less in many cases. For example, you have to redeem at least 25,000 points to earn $250 cash back. Redeem less, and your points aren’t exactly worthless, but they are worth less.

Get it if: You are a loyal BoA customer and you want a reward system tied to your existing accounts. This keeps everything in one tidy package that’s easy to keep track of.

Forget it if: You realize that there are other fixed-value travel rewards programs that offer much more.

4. US Bank FlexPerks

Holders of any card that earns FlexPerks can redeem their points for cash back at the rate of 1 cent each. Alternatively, their travel agency will exchange points for air travel at a rate between 1.2 and 2 cents each. For example, a ticket that costs between $600 and $800 requires 40,000 points, so point value is tied to ticket value.

Get it if: You like the idea of redeeming points directly for airfare with their agent. Keeps things simple.

Forget it if: You don’t like the uncertainty of redeeming a fixed number of points for tickets across a range of airfares.

Who are these fixed-value point programs best for?

Usually, the person who earns points in one of these programs isn’t a risk-taker. They’re busy people who just want to know exactly what they’ll get when they cash in points. They travel occasionally, don’t have flexible schedules when they do, and they want plenty of other options for redeeming their points.

Most important, these types of programs are not for people who aspire to use their rewards to fly in International Business Class or stay in luxury hotels. The way these programs work, such extravagant experiences will require an outrageous number of points. But if you want to fly and stay in style, check out tomorrow’s post.

Tuesday: How to transfer rewards into miles or points that score big with airlines and hotels.

Stacy Johnson

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