Travel points on credit cards, explained

Savvy shoppers can turn everyday spending into exciting adventures by harnessing the power of travel points on credit cards.

Travel points on credit cards are rewards earned for eligible purchases. When someone accumulates enough points, they can redeem them for travel-related expenses like flights, accommodations, or upgrades.

From earning to redeeming, discover the world of travel reward points in this guide.

How do travel points work?

Travel points on credit cards work by rewarding people for their spending. When someone uses their credit card for eligible purchases, they may earn a certain number of points or miles based on the card's rewards program. These points accumulate over time and can be redeemed for travel costs.

Some cards or reward programs also offer flexible redemption options, allowing individuals to transfer points to airline or hotel loyalty programs.

The more someone spends on their card, the more travel points they may accumulate. However, it’s important to practice responsible spending and not make purchases simply to earn more points.

While some credit cards may be specifically noted as travel credit cards or offered in tandem with airline companies, many rewards credit cards can still be used to earn points or cash back to spend on travel or lodging. There may also be rewards programs via cash back apps that offer earning potential for spending with certain travel-related companies or airlines. For example, PayPal users can view travel-related deals and rewards offerings in the Travel category on the PayPal app. Rewards earning and redemption options will vary depending on card provider and/or rewards program.

Potential pros and cons of travel points

Some benefits of travel points may be:

• Free or discounted travel expenses: Travel points may be redeemed for complimentary or discounted flights, hotel stays, and even upgrades, allowing for cost savings on travel expenses.
• Travel perks: Some travel rewards cards provide access to airline or hotel loyalty program benefits, such as priority boarding, lounge access, and room upgrades.
• Flexible redemption: Many programs offer flexible redemption options, including the ability to transfer points to partner airlines or hotels, providing more choices for travelers.

Before signing up for a travel rewards credit card, consider the possible risks of travel points:

• Limited flexibility: Some travel rewards programs may have restrictions or blackout dates. Points may also have expiration dates — if unused, someone may lose their rewards.
• High annual fees: Many premium travel rewards cards come with annual fees, which may offset the value of the rewards.
• Increased spending: To earn travel points, people must use their credit card, which can lead to debt if not managed responsibly.

How to earn travel points

To earn travel points, someone generally needs to use a travel rewards credit card on eligible purchases. Over time, they may accumulate enough points to enjoy a benefit like free or reduced airfare or a discounted hotel stay.

Beyond everyday spending, here are other ways to potentially earn travel points:

• Sign-up bonuses: Many travel rewards credit cards offer sign-up bonuses when opening a new account and meeting a spending requirement within a specified timeframe.
• Frequent flyer and hotel loyalty programs: When someone flies with a specific airline or stays at a particular hotel chain consistently, they may accumulate points or miles that can be redeemed for future travel.
• Online shopping portals: Some airlines and credit card companies have online shopping portals that offer bonus points for making purchases through their platforms.

Accumulating travel points requires responsible financial management, including paying off credit card balances in full each month to avoid interest charges. Additionally, check for any annual fees associated with travel rewards credit cards and ensure that the benefits outweigh the costs.

How to redeem travel points

Travel rewards credit cards may offer several redemption options, from flights or hotels to vacation packages or statement credits. When booking through a rewards portal, people typically have the option to pay with points or a combination of points and cash.

The redemption process may vary slightly depending on the specific travel rewards program or credit card. Always read the terms and conditions of the rewards program and credit card to understand any restrictions, blackout dates, and expiration policies associated with the points.

Learn how to redeem rewards.