What is a good Points Rewards Rate?

Rewards Cards are credit cards that help you earn cash, points, or miles for your purchases. They can be redeemed for cash, travel, gift cards, etc. The main types of rewards cards are cashback cards, points cards, and loyalty program/miles cards. There is no such thing as a ‘good’ rewards rate because rewards rates differ across firms and should be chosen based on your interests and lifestyle. However, most people want around 3% for purchases from a cashback card, and most firms’ points are equal to one cent. Here are the rewards equivalencies for some popular miles and points cards. 

Points Card Equivalencies 

• American Express Gold: 1 point = 1 cent for travel, giftcards, charity donations and 0.5 point = 1 cent for entertainment 
• Chase Sapphire Preferred: 1 point = 1.25 cent for travel, 1 point = 0.6 cent for cashback
• PNC Points Visa: 1 point = 0.2 cents for gift cards or statement credits, 1 point = 0.18 cents for merchandise 

Loyalty Program Equivalencies 

• American Airlines AAdvantage: 1 point = 2.58 cents 
• Delta Airlines SkyMiles: 1 point = 1.21 cents
• United Airlines MileagePlus: 1 point = 1.69 cents 

Cashback cards are generally simpler, as a percentage of the cash you spent is automatically returned as a check, a statement credit, online transfer, or used for purchases. Cashback percentages usually range from 1%-6%. 

You can make the most of your rewards credit card if you enroll in the bank’s associated rewards program. For example, the Bank of America Premium Rewards Card gives you 1.5x points on non-bonus purchases, but if you reach Platinum Honors status in their Preferred Rewards Program (when you have $100,00 in BoA or Merrill accounts), that number is bumped up to 2.625x. Similarly, if you hold the Chase Sapphire Preferred Card and are part of their Ultimate Rewards Program, you can claim 25% more value when you redeem on airfares, hotels, travel, etc. 

Moreover, some programs allow cardholders to transfer rewards to other programs. For example, Chase Ultimate Rewards has a 1:1 transfer. However, the amount that you actually get will also depend on the rewards redemption rate of the loyalty program. So if points are transferred to American Airlines’ AAdvantage as opposed to United Airlines’ MileagePlus, you will get more bang for your buck. You may also get additional points by transferring to certain loyalty programs. For example, when American Express points are transferred to Hilton Honors, your points are doubled.

How do I make the best of my rewards program? 

• Make sure you pick the right card: You need to pick the card that fits your lifestyle best. If you travel extensively, you may want to get a card that leads to higher rewards rates for travel or allows you to transfer points to a third-party loyalty program for greater overall value. However, if you spend largely on groceries, a cashback card like the American Express Blue Cash Preferred with a high grocery cashback may be more immediately beneficial to your lifestyle. 
• Stay on top of your payments 
• Use multiple rewards cards: This can be both a pro and a con. If you have multiple rewards cards, you can claim the most value in multiple areas. However, it may get confusing managing multiple programs
• Charge multiple purchases to your card: Make sure you’re charging different categories to your card so that you can rack up the most points possible 
• Track your points: So many people earn points but do not end up redeeming them because it slips through the cracks. Make sure that you aren’t one of them 
• Remember the bonus categories: Be aware of the categories you can earn rewards from when shopping 

Rewards cards aren’t right for everyone. However, if you spend extensively on categories that rewards cards offer, choosing the right one can really help your finances.