Getting Started With Points and Miles

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A plain-language starter guide to travel rewards in the U.S.: how points are earned, what each currency is worth, and the mistakes that cost beginners the most.

Points and miles can cut the cost of a flight or hotel stay to little more than taxes and fees, but the systems reward people who understand the mechanics. Consumers earned more than $40 billion in credit card rewards from major general-purpose cards in 2022, more than 50 percent more than in 2019, according to the Consumer Financial Protection Bureau. Here is how the machinery works and where beginners give value back.

How Travel Rewards Actually Work

Credit card rewards come in three main forms: cash back, points and miles. Cash back returns a percentage of each purchase in dollars, so a 2 percent card pays 2 cents back per dollar spent. Points and miles pay in a travel currency instead. A typical card earns 1 point per dollar, with 2 to 5 points per dollar in bonus categories such as travel, dining, groceries or gas. Miles generally earn 1 to 2 per dollar on travel purchases, and some cards pay 2 to 5.

The scale explains the advertising. More than 550 million credit cards circulate in the United States, carrying more than a trillion dollars in outstanding debt, and rewards balances alone stood above $33 billion at the end of 2022. When a card funds an award flight, the out-of-pocket cost can drop to just taxes and fees.

Airline Miles, Hotel Points and Flexible Card Points

Airline miles live in one airline’s frequent flyer program, and hotel points in one chain’s program. Miles on a bank’s travel card are usually more flexible than airline miles, and card points can often be redeemed for cash, statement credits, or sometimes flights and hotel stays.

Some issuers also let you transfer points to airline or hotel partners, where redemptions can be worth more. Transfers are typically one-way, so leave points where they sit until you have a specific redemption in mind. For reference, one publisher’s valuations from June 2024 put transferable currencies at 1.6 to 2.2 cents each and most airline miles at 1.1 to 1.6 cents.

Earning: Everyday Spending and Sign-Up Bonuses

Two engines build a balance. The first is ordinary spending in the card’s bonus categories, so match the card to where your money already goes; a card paying 5 points per dollar on flights earns little for someone who rarely buys them. The second is the welcome offer: many cards pay extra points or miles if you spend a certain amount within your first six months. Chase a bonus only when the spending target fits a budget you already have.

Loyalty programs are the free third piece. Joining costs nothing, and adding your membership number to every booking is what makes points post. Some basic economy fares do not earn miles, so check before assuming a cheap ticket will credit.

What a Point Is Worth: Cents Per Point

Travelers compare redemptions using cents per point: the cash price of a trip divided by the points it would take. Illustration: a flight costing $300 in cash or 25,000 miles works out to 1.2 cents per mile. If a redemption falls below the June 2024 benchmark values, taking cash or a statement credit instead may be the better deal. Run the numbers each time; value depends on the specific flight or room.

Redeeming: Paid Tickets vs. Award Tickets

Award tickets follow different rules from paid tickets. When a cash ticket qualifies under the Department of Transportation’s automatic refund rule, the airline owes your money back without your asking; our guide to airline refunds covers when that applies. Award rules vary by program: some currencies must be transferred to a partner before booking, and change and cancellation terms are set by each program. Read them before moving points, because transfers generally do not come back.

The Traps That Erase the Value

Carrying a balance is the biggest one. Interest on unpaid credit card debt routinely exceeds the value of any rewards earned, and the CFPB has found that retail credit cards charge significantly higher interest rates than traditional cards. A 2 percent return cannot outrun a high rate.

Annual fees come next; a fee makes sense only if you will actually use the card’s rewards and perks.

Devaluation is the third risk. Programs can change redemption rates, and the CFPB warned in a 2024 circular that companies may violate federal law when they devalue rewards already earned, revoke them based on buried or vague conditions, or deduct points without delivering the benefit. The CFPB and the Department of Transportation held a joint hearing on these practices in May 2024. Check whether points expire; each program writes its own rules.

A Simple First-Year Plan

1. Treat the card as a payment device: charge only what you would spend anyway, and pay the statement in full each month.
2. Join the loyalty programs for the one or two airlines and hotel chains you already use, and add your membership number to every booking.
3. Pick one rewards card whose bonus categories match your spending; the CFPB’s Explore Credit Cards tool compares more than 500 cards on rates and fees.
4. Earn one welcome bonus whose spending target fits your budget.
5. Bank the points until you have a specific trip, then check the value in cents per point before transferring anything.

If the card travels with you, read our guides to travel money terms and chip-and-PIN cards. Unattended ticket machines and fuel pumps abroad can decline a card that works at a staffed counter.

One sensible first step: join the free loyalty program of the airline you fly most and add the number to your next booking. Points you would otherwise leave behind start collecting right away, and some programs let you claim miles for a past flight within a limited window.

Travelers also ask

Q: Do I need to travel often for points and miles to be worth it?

A: No. Occasional travelers benefit by matching one card to everyday spending, joining free loyalty programs, and paying the balance in full. The welcome bonus usually does more work than flight frequency.

Q: Can a bank or airline reduce the value of my points after I earn them?

A: Programs can change their terms, and devaluation is a known risk. The CFPB has warned that devaluing rewards consumers already earned may violate federal law.

Q: Should I redeem points for cash or for travel?

A: Travel redemptions, especially through transfers to partners, often beat cash value; transferable points were valued at 1.6 to 2.2 cents each in June 2024, versus 1.1 to 1.6 cents for most airline miles. Compare the specific redemption before deciding.

Q: What should a beginner do first?

A: Join the free loyalty program of the airline you fly most, add your membership number to every booking, and pay any rewards card in full each month. Then add one card whose bonus categories match your spending.

Fees, processing times and agency rules change, and airline and hotel policies vary. This guide is general information for travelers in the U.S.; confirm the current rules with the agency, airline or hotel before you travel.