Points or miles credit cards: different names, similar rewards

Photo: Tom Barrett

The credit card market is, basically, a rewards market. With the exception of beginner cards for building or rebuilding credit, each card tries to knock the others off of the podium with its best rewards program. These rewards come in various forms—cash back, points and miles—but they all do the same thing: give something back for spending money with that credit card. Though they're similar in effect, they're very different in whom they benefit. Choosing the right card means understanding your own spending habits and what rewards will benefit you the most.

Miles and points cards operate in the same way. You'll accumulate a balance of miles or points at a certain rate that you'll eventually redeem for rewards. And while true cash back cards automatically apply your cash back as statement credit, some actually behave like a points card. If a card offers 1 point for every $100 spent, that point is worth $1 and it will stay in your account until you accumulate enough to redeem them.

The main difference between points cards and miles cards is in the rewards offered. Points cards tend to be more flexible because a miles card is typically sponsored by one airline. A United Airlines Explorer card will earn United rewards: flight discounts, free upgrades, free bags, etc. A Chase Ultimate Rewards card, on the other hand, offers 1¢ per dollar spent to use on shopping sites like Amazon.

Here, it is important to understand your spending habits. Many points cards let you redeem points on specific rewards, or partner websites. Meanwhile, some cash back cards, even those that are basically points cards, give higher cash back value for certain categories, such as restaurants or gas. What you buy and what you want to receive for your points or miles will signal which card is best.

If you travel frequently, the rewards of a miles card will probably justify being locked into one airline. If you're paying off student loans, Citi ThankYou Points offers rebates to help. If you love to try new restaurants, the Uber Visa card will give 4% back on dining purchases. One surprising study showed that hotel-affiliated rewards cards actually offered better rewards rates than airline cards or cash back programs, even when used on everyday purchases. The average rewards rate for hotel cards was 2.5%, higher than many other points- or miles-earning cards.

The other important factor to consider is the sign-up bonus that might be offered by one card and not another. For example, the Uber Visa card earns a $100 bonus after you spend $500 in the first 3 months. The Citi ThankYou card earns 15,000 points after $1,000 spent in 3 months. The Chase Sapphire Preferred card gives you 50,000 bonus points when you spend $4,000 in 3 months. This card's points can become miles—50,000 points becomes $625 towards airfare. It also offers double the points earned for travel purchases and dining, so it's a good example of how cards can cross over into other categories regardless of whether they earn "points" or "miles."

While shopping for a card with high rewards, be careful of annual fees. After the first year, the Chase Sapphire Preferred card charges $95 per year. Depending on the amount you spend, this fee (and the similar fees on other cards) could start to cancel out some of the rewards you earn. The Uber Visa card, on the other hand, has no annual fee. Read the details of any credit card agreement carefully because an annual fee might start (or increase) only after the first year.

The credit card market is full of great rewards through various partnerships with airlines, hotels, websites and other companies. Though it takes time and patience to sort through the fine print of dozens of cards, your work will pay off for years, whether it's in cash back, points or miles.

Tom Twardzik is a personal finance writer for Paypath. He also covers music, film, TV and gaming for Popdust, social issues and current events for The Liberty Project and travel for The Journiest. Read more on his page and follow him on Twitter

From Your Site Articles
Related Articles Around the Web
money
PayPath
Follow Us on

How to Handle a Damage Dispute in an Airbnb

Airbnb is a great option while traveling, but you should protect yourself from damage charges from unscrupulous hosts.

Airbnb offers an affordable option for people looking to be more comfortable as they travel.

However, there are downsides to staying in a host's home rather than a hotel. Whereas hotels are designed for constant streams of visitors and often have furniture built to last, at an Airbnb, you may be staying on old or cheap furniture that a host is using in order to maximize their profits.

And while most reputable hotels will have regular room inspections from staff to check for any wear and tear, Airbnb damage disputes are oftentimes he said, she said situations. If you are in an Airbnb and something breaks, there are a few steps you should take in order to ensure that you are not on the hook for damages out of your control.

Keep reading Show less
airbnb

What Are NFTs?

Art Installation N°1 by Carlos Marcial. Rhett Dashwood / YouTube

If you're keeping tabs on the art and tech worlds, you've probably been hearing whispers about "NFTs" for the past month. Just over the past week they've entered the mainstream lexicon.

Twitter founder Jack Dorsey made the news for selling his first ever tweet. The app has been teasing paid subscription models and newsletter-like features, but tweets for sale is "the next frontier."

The 2006 tweet went up for auction as an NFT, and the current bid is $2.5 Million. But what does it mean to own that? Why would anyone want to? And what even is an NFT?

Keep reading Show less
culture

Savvy Tips for New Real Estate Investors

Long gone are the days when the majority of Americans dreamed about owning a home with a white picket fence.

The traditional American Dream may be on its deathbed, but that doesn't mean a core component of the vision can't survive. It simply takes a diverse perspective. People can still believe they can attain their own vision of success in society with hard work, knowledge, and risk-taking. Investing in today's American Dream may literally mean investing money in our modern economy, starting with our infrastructure.

Real estate investing in particular is a lucrative method that can boost income and secure a better financial future for many. There's always risk involved, but the payoffs can far outweigh the uncertainty. Selecting solid financial investments is about confidence and competence. If you're looking for some advice on this kind of investment, here are a few savvy tips for new real estate investors.

Stick To a Specific Strategy or Niche

Real estate is a challenging sphere of the business world, one that requires several key skills: groundwork knowledge, networking, perseverance, and organization. True knowledge of the real estate market will come with time and experience, but it's a smart idea to select one area of the market and stick to it. This is the best way to attain in-depth familiarity with your specific niche.

First, choose a geographical area close by and then a niche strategy within it, such as house flips, rental rehabs, or residential or commercial properties. By doing so, you can become aware of current inner working conditions in the market and you'll have a better idea of how these trends may change in the future.

Be Vigilant About Viable Financing Options

While it takes money to make money, you don't have to use all your own money. A common misconception about real estate investing is that you must be wealthy to start off. This isn't straight fact, however. A majority of people can test the waters of real estate investing without a lot of initial cash in their pocket.

Aside from traditional financing options from banks and institutions, private lending options can be worthy solutions. Hard money lenders are popular, reasonable choices, and they tend to have fewer qualification requirements upfront. However, be sure to strategically choose a hard money lender to find the best possible fit.

Master the Art of Finding Good Deals

There may be hundreds of thousands of available properties for sale on the current market, but the bulk of them will never amount to the final money-making result you desire. Another great tip for new real estate investors is to use good math to estimate profit. Taking risks is part of the process, but you have the ability to analyze properties and use networking sources to find the greatest deal. You can't win every deal, but you can steadily work towards a thriving financial future.

From Your Site Articles
real estate investing