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Racking Up Credit Rewards

Keep in mind, however, that these benefits only apply if you charged the purchase to the credit card with these protections. For example, you won’t receive protection if you did not book your airline tickets with a credit card that offers Travel Assistance or Lost Luggage Reimbursement.

It’s common for credit card companies to offer similar benefits and coverage, however they may have different program titles, causing confusion to consumers. For example, Lost Luggage Reimbursement has also been called Damaged Baggage Protection, Baggage Insurance Plan, Baggage Delay Insurance, or Lost Luggage Tracking. If you don’t fully understand your benefits coverage, contact your card issuer to determine how you are protected.

Points Rewards Cards

Some credit cards allow you to earn points for credit card purchases. These points can then be redeemed for items including merchandise, gift cards, cash back, or more.

Most credit card points are worth about one cent each towards merchandise, gift cards, and cash back. Major loyalty programs that follow this general rule include Chase Ultimate Rewards, American Express Membership Rewards, and Citi ThankYou Points. Furthermore, Chase will allow you to exchange Ultimate Rewards points for one cent each as cash back, and if you redeem for travel, they give you a 25% discount, making them worth 1.25 cents a piece.

But when it comes to airline and hotel programs, all bets are off. Some points can be worth less than one cent each, while others can be worth much more, depending on the program and how you redeem the points.

In some cases, points can be transferred from one program to another, so it helps to know how much each company’s points are worth in order to maximize their value. Programs that allow point transfers include American Express Membership Rewards, Chase Ultimate Rewards, and the Starwood Hotels Preferred Guest program.

How Do You Earn Points

Part of the confusion about points stems from the myriad of ways they can be earned.

Credit card holders can earn points from sign up bonuses and regular spending. In addition, bonus points are often available when making purchases through an online shopping portal.

If the points are from a third party program, such as one run by an airline or hotel company, then that company might offer points through dozens of other partners. Points can be earned through airline, hotel, or rental car reservations, dining programs, financial services, or just about any other transaction you can imagine. So it’s worth taking a moment to browse your favorite program’s web sites and learn how to earn points.

What's the Catch?

If you can earn points in all sorts of ways, and spend them on all kinds of goods and services, what can go wrong? First, the company that issues the points owns them, not the customer. That means that if you cancel a credit card (or the card issuer cancels your account) you will likely lose any points earned in a program operated by the bank (you will not lose any airline or hotel points).