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Credit card points are the main way credit card companies reel you in. After all, who doesn’t love free stuff? But all those “free” rewards actually come at a cost—and either you’re the one paying it or someone else is.
So, are credit card points worth it? No, they’re not.
Listen, credit card companies are master marketers. And they know just what to say to get you to sign up for one of their flashy cards. But most people don’t know the truth behind how credit card rewards work. And this keeps the bigwigs in their shiny towers doing what they do best: robbing people like you blind.
Let’s dig into why credit card points aren’t worth the hype—and why the points game actually holds you back from winning with money.
Are Credit Card Points Worth It?
Here’s how it goes: A credit card lender gives you a credit card to use (with a credit limit, of course). And depending on the terms of your credit card, you earn up to a certain number of points per transaction. The more money you spend, the more points you rack up. Once you hit a certain amount of points, you can trade those puppies in for some kind of reward.
Sounds simple enough, but there’s always a catch, right? The thing is, those points and prizes are all determined by the banks and credit card companies. And Discover and Mastercard aren’t handing out free stuff because they’re super generous.
It’s actually the opposite: They know if they can convince you to play the points game, you’re more likely to rack up a higher balance and pay them more in credit card interest.
Trust us, they’ve done all the research, and they wouldn’t waste their time handing out rewards if it didn’t ultimately make them richer. In fact, the credit card industry was valued at over $100 billion in 2020—and it’s expected to reach $107.69 billion in 2025.1
So, what does all this mean for you? It means the odds aren’t in your favor. And going after credit card points isn’t worth the risk of forking over a whole lot more money in the long run.
It’s kind of like gambling in a casino. Sure, you may win every now and then, but how much did you lose in the process? And how many people had to lose big for you to cash in? The house (in this case the credit card company) always wins.
Ways to Redeem Credit Card Points
Once you’ve earned enough credit card points to cash in, you can choose from a list of things like cash back, travel miles, gift cards, discounts at restaurants and more. The kind of perks you get depends on your credit card issuer and your specific card.
You usually earn about one point per dollar spent. But when it comes time to redeem your points, you’ll find that one point equals roughly one penny. (Isn’t that convenient? For the credit card company, that is.) Basically, you have to spend a lot just to get a little back.
You can often trade in your credit card points for cash. Or when you spend with your credit card, you can get a percentage of cash back on your purchases. How much? It all depends on your card issuer, but many offer anywhere from 1–2%.
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Some cards will give you 3–5% back on specific transactions like travel, groceries or gas—usually up to a certain amount. But some stores might not be a part of the deal, depending on your card. And keep in mind, if you’re using points to get cash back, you usually have to build up a certain amount of points before you can redeem them.
Now, you might think cash back means you get actual money deposited in your bank account. But that’s not necessarily the case. You can request a mailed check, but most of the time, your card issuer will just put the money toward your current card balance—which (surprise, surprise) keeps you spending more with your card.
And watch out for credit cards that offer cash back incentives for a short period of time. For example, you might have to spend $800 in three months to get $200 cash back . . . as long as you make your minimum payments. But your card issuer is also banking on the idea that they’ll make that money back from you sooner rather than later (yeah, they’re not stupid when it comes to this stuff).
Everyone loves free travel. And airline tickets can be pretty pricey these days, so it makes sense why earning free flights is so appealing. But are they really free? Uh, not quite.
You have to spend a decent amount of money to get enough points for a free flight. You can collect points or miles based on how far (or how often) you fly and how much you spend on your credit card. For most cards, every dollar you spend equals one travel mile. But when you’re trying to redeem them, each mile is worth about a penny, depending on the kind of card you have (that’ll get you about a foot down the runway).
So, that $500 plane ticket is yours “free” in exchange for building up a whopping 50,000 travel miles. But remember, since $1 equals one travel mile, you’d have to spend about $50,000 to get that free flight. That’s a lot of money. And don’t forget to add on taxes and fees . . . because your travel miles don’t cover those either. That free flight isn’t so free anymore, is it?
Not only that, but some airlines only reserve a certain number of seats on each plane for travelers with travel miles. That means when you try to cash in your miles, your options may be more limited than that flashy credit card brochure let on when you signed up.
And don’t forget about blackout travel dates. If you were hoping to use your points to visit Grandma in Wyoming this Christmas . . . don’t get your hopes up. It turns out not all travel dates are redeemable with your credit card rewards points (sorry, Grandma).
Besides airline miles, credit card companies will tempt you with lots of other shiny travel prizes to redeem your points for—including discounts on rental cars, hotel stays and cruises.
But like we’ve already said, the bigger the reward, the more swiping you have to do to earn it. By the time you’ve gotten enough points to get that one-night stay at a Hampton Inn in Cincinnati, you could have saved up for your dream vacation and not paid the credit card company a cent. (And just so you know, you don’t even need a credit card to travel.)
Your lender might also throw out the promise of gift cards or discounts at your favorite restaurants and stores. But just like store cards, you end up going back to those places way more—and spending more money—than you would if you weren’t trying to use your discount. Seriously, credit card companies know how you think (and spend) better than you do.
Dangers of Credit Card Points
We’ve touched on a few of the sneaky ways credit card companies profit from credit card rewards. But there’s more to it than just some tricky fine print. Here’s how playing the credit card points game can cost you.
One thing we can all agree on is the appeal of free stuff. That’s why you click on emails with subject lines like “Free gift with purchase.” It’s why you’ll drop $399 on one pair of cowboy boots at the boot outlet just to get another pair free. But did you even need a pair of boots in the first place, or did the sale make you buy them?
The word free will cause most of us to stop what we’re doing and run to the store. And credit card companies know this. All those “free” rewards are designed to get you to spend more of your hard-earned money. It’s kind of like those claw machines at an arcade. Sure, you got the teddy bear, but how much did you spend trying to get it?
Plus, very few people will actually read the fine print and notice that those rewards aren’t as good or as free as they thought. And what you don’t know or understand as a cardholder will come back to hurt you. Credit card rewards—and credit cards as a whole—are a trap! Don’t fall prey.
Point Expiration Dates
Every card has its own set of expiration rules. Some points can expire after just 18 months, which barely gives you enough time to rack up enough points to book that flight to Denver.
But time isn’t the only thing working against you. Did you know you could lose all your rewards if you miss one payment? Policies vary from card to card, but cardholders can lose all or some of their points for missed payments or card inactivity (not using your card enough). All that work (aka spending) could end up being for nothing.
Also, credit card companies can change their points system whenever they feel like it. So, even if you think you’ve figured out how to play their game, nothing is guaranteed.
A big way credit card lenders make their money is through annual fees. In fact, banks made $106.7 billion off credit card interest and fees in 2021.2
When they sent that glossy flyer to your mailbox, they knew you’d be lured into signing up with the promise of bonus points, rewards and “free” money. But what they forgot to mention is how much their card will cost you per year in annual fees. If you don’t understand how they work, those annual fees will eat your credit card benefits for breakfast (and probably lunch too).
Let’s say your card offers airline miles and has an $80 annual fee. If you spend $8,000 on the card every year and pay it off each month, you’ll have racked up enough miles to get a free ticket in three years. Three years! And by that time, you’ll have spent $240 in annual fees alone. You could’ve already paid for your own flight with that money!
Interest Rate Bait and Switch
A lot of the credit cards that offer the “best” rewards are the ones with crazy high interest rates or variable interest rates, usually anywhere from 19–28%. That’s insane!
Some credit card companies love to draw you in with a low introductory rates. You take the bait and sign up for the card. Then bam—your interest rate jumps 10% or more! No thanks.
Think about that for a second: When you open up a credit card, you’re likely to pay thousands of dollars in interest over the years if you carry a balance. Even if you promise to pay it off every month, all it takes is one late or missed payment for your interest rate to skyrocket, your credit score to drop, and your credit card statement to get slapped with fees. By making just one tiny mistake, you could get in a lot of credit card debt.
If you think a card’s low interest rate is too good to be true, it is. Don’t fall for the old bait-and-switch routine!
Your Win Comes at Someone Else’s Cost
Have you ever thought about how credit card companies can offer all these rewards? It’s because they’re making plenty of money off people trapped in credit card debt. In fact, Americans as a whole are $986 billion deep in credit card debt—and that number is steadily rising.3
Somewhere out there, a single mother is struggling to make ends meet. Every time she misses a payment, the interest she gets charged goes into the credit card company’s endless pool of money they use to tempt the next unsuspecting victim.
You might be able to pay off your credit card balance at the end of every month. But the only reason you get any cash back on your next purchase is because someone else is drowning. That’s not your fault. But do you really want to be a part of a system that profits off other people’s loss? Feels pretty icky, if you ask us.
You Don’t Need Credit Card Points to Win With Money
Credit card points are a slippery slope. If impulse buying and overspending come naturally to you, the pressure to spend more in order to get credit card points and rewards is real.
You start off only using your card for “necessities.” But then you start dreaming about free flights and all the cash back you could get. Pretty soon, you’re justifying extra purchases and having trouble staying on top of your monthly payments. Once you’re thousands of dollars deep in credit card debt, you’ll be wishing you could swap out your points for a clean slate.
And let’s face it: No one ever got rich off credit card points.
Instead of relying on the credit card industry to reward you for spending . . . why not reward yourself? By keeping more of your paycheck.
When you live on less than you make, stick to a budget, and refuse to go into debt, you’ll rack up so much more than credit card points. You’ll build a life you actually love with money you have in the bank—instead of being limited to what credit card companies pull from their bag of tricks.
If you’re ready to actually make progress with your money, you need a budget. And great news: You can create a budget for free right now with EveryDollar!
Because when you have a plan for your money, you don’t have to rely on credit card points—or credit cards at all. Instead of being charged interest, you’re the one in charge. Now, that’s priceless.
Take Your Cash Back
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