What You Need to Know About the 3 Types of Credit Card Points and Miles

When it comes to travel credit card rewards, it’s hard to know what you’re going to get by just looking at the card’s marketing page. All these credit cards use either “points” or “miles,” but there are a few types of credit card points and miles out there — and they’re not all created equal.

Sign-up bonuses and rewards rates can look appealing, but they might not all translate the same when it comes time to redeem them. You may get more value from a card with a lower bonus and rewards rate than one that allows you to quickly rack up rewards.

As such, it’s crucial to understand how the different types of credit card points and miles work and how to assign value to the points you earn so you can maximize your rewards every time you redeem them.

3 types of credit card points and miles to know about

Before you pick the best travel credit card for you, it’s important to know what you’re getting with the various rewards program. Here’s how to differentiate between the different types of credit card points and miles that are available. 

Transferable points

As the name suggests, transferable points allow you to use your rewards within the program where you’ve earned them or transfer them to one of the program’s travel partners. Depending on the card, these partners can include airlines, hotels, and potentially even more.

Both the Chase Sapphire Preferred^® Card and the Chase Sapphire Reserve^® offer transferable points, and the Capital One Venture Rewards Credit Card comes with transferable miles. Points earned with any card that offers Amex Membership Rewards will also be transferable.

The main benefit of transferable points and miles is that they give you flexibility in how you use your rewards. Also, because airline and hotel loyalty programs typically offer dynamic rewards values, transferable points can give you a chance to squeeze more value out of your rewards than you might by redeeming them with the original program.

That said, you won’t have the chance to transfer your points to just any program. Instead, you’ll be restricted to the travel companies with whom your card issuer has partnerships. Also, in some cases, you may lose value by trading your points to a different loyalty program.

Fixed-value or eraser points

These types of credit card points and miles typically offer a fixed value per point or mile with a lot of flexibility in how you redeem your rewards.

With the Bank of America^® Travel Rewards credit card, for instance, you use your card to book just about any type of travel, then use your points within 12 months to get a statement credit for the purchase — effectively erasing the transaction.

Another way to use these kinds of points is to book travel directly through a reward program’s booking tool. For example, the Sapphire cards allow you to use your points to book travel through the Ultimate Rewards platform, and you get extra value when you do so. With the Chase Sapphire Reserve, you’ll get 50% more value out of your Ultimate Rewards points when you use them this way. With the Chase Sapphire Preferred, the bonus is 25%.

This type of credit card points and miles can be a great way to get a lot of flexibility with redemptions. As long as a purchase is coded as travel or you can find something in the program’s booking tool, you can use your rewards.

The drawback to these programs is that giving you a fixed value can ultimately result in you leaving money on the table. If, for example, you could use 100,000 points to book a $1,000 hotel stay, that’s a rate of one cent per point. But if you could get the same stay by transferring 75,000 points to the hotel’s loyalty program, that would be 1.33 cents per point, giving you more value — and making transferable points the better option.

Co-branded cards and points

Co-branded credit cards are cards that partner with a specific brand — in the case of travel rewards cards, that means airlines and hotels — to offer rewards and special perks. So, when you earn miles with your favorite airline, you can easily redeem those rewards for nearly free flights without having to jump through hoops.

Some of the better airline and hotel cards that offer co-branded points and miles include the United℠ Explorer Card, the Delta SkyMiles^® Gold American Express Card, The World of Hyatt Credit Card, and the Marriott Bonvoy Boundless^® Credit Card.

Earning points or miles with a co-branded credit card can be an excellent choice if you’re loyal to that brand and want to take advantage of other perks the card provides, such as priority boarding, free checked bags, complimentary room upgrades, or a free anniversary night.

On the flip side, these loyalty programs typically don’t offer a lot of value when used for anything but their primary purpose — booking flights and hotel stays. Also, because they have a dynamic rewards structure, it can be harder to tell exactly how much value you’re getting out of each point or mile you earn.

Why the 3 types of credit card points matter when it comes time to redeem your rewards

The type of credit card points and miles you’re earning has a significant impact on the real value of the rewards you’re getting with your credit card.

For example, the Hilton Honors American Express Surpass^® Card welcome bonus is: Earn 150,000 Hilton Honors Bonus Points after spending $2,000 on purchases in the first 3 months. With Hilton points worth roughly 0.5 cents apiece on average, you’re getting just $625 in average value from that incentive. 

Contrast that with The World of Hyatt Credit Card sign-up bonus: Earn up to 60,000 bonus points: 30,000 points after you spend $3,000 on purchases in your first 3 months from account opening, plus up to 30,000 more bonus points by earning 2 points total per $1 spent in the first 6 months from account opening on purchases that normally earn 1 bonus point, on up to $15,000 spent. With Hyatt points worth 1.6 cents each on average, new cardholders will get $800 in average value from the bonus.

Because valuations can vary drastically based on the program, your itinerary, and when you book, it’s not always easy to nail down a good rewards rate. However, if you can manage to get more than the average value, you’ll be in good shape.

Which type of credit card points are the best for you?

Picking the right credit card isn’t always easy, especially when the rewards programs can vary so wildly. So it’s important to understand your travel habits and goals before you choose the card that’s a good fit for you.

For example, if you love traveling with just one airline or hotel chain, getting a co-branded credit card could help you level up with elite status and give you access to exclusive perks. If, however, you want more flexibility, a card that provides transferable partners, a fixed-value redemption rate, or both will likely be your best bet.

Unfortunately, there’s no simple formula for how to calculate how much a credit card point or mile is worth. However, you can do some research while you’re booking your trip.

For example, if you find a Delta Airlines flight for 25,000 miles or $400, you’re getting 1.6 cents per mile out of that redemption. If you look at another flight with the same mileage requirement but a $300 price tag, you’re getting just 1.2 cents per mile — not as worth it.

As you learn more about the different types of credit card points and miles, you’ll see it’s easy to get lost in the math. But to make sure you always have a good experience, remember to keep things fun. Instead of getting overwhelmed by all the options, choose the one that works for you now and run with that.

You can always start with a simple rewards card and get more adventurous later as you’ve learned more. Using this strategy won’t necessarily ensure you’re getting the most bang for your buck every time you use the card. But it can make earning and redeeming rewards more fun and fulfilling.