Introduction to Credit Card Reward Programs for Travelers

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The world of points and miles-funded travel can be as overwhelming as it is exciting. With such a wide range of travel rewards credit cards on the market, determining which one is best suited to your individual goals can be challenging. After all, nobody wants to miss out on the opportunity to snag first-class tickets across the world or an award stay at an overwater-bungalow in Maldives.

However, determining where to start in the points and miles hobby begins with understanding the basics. Namely, it’s crucial to understand the differences between credit cards that earn transferable rewards, those that earn fixed-value rewards and those that earn points within a hotel or airline’s loyalty program.

Once these differences are clear, you’ll be better positioned to determine which type of rewards card you should be prioritizing to make your dream trips happen faster.

Let’s run through the different types of points earned by various travel rewards credit cards, as well as some hints and tips for choosing your first card.

Transferable Point-Earning Credit Cards

Transferable points-earning cards do exactly as their name suggests—they earn points that can be transferred.

Examples of transferable points currencies include American Express Membership Rewards, Chase Ultimate Rewards, Citi ThankYou Points and Capital One Miles.

You can transfer these rewards to hotel and airline loyalty programs, typically at a ratio of 1:1, to redeem them for award stays and flights. For instance, if you transferred 30,000 Chase Ultimate Rewards to United Airlines, they’d be converted to 30,000 United MileagePlus miles. From here, you could either book an award flight with United or with one of its partner airlines (more on that later).

It’s important to keep in mind that point transfers are final. Once you move your transferable points from your credit card rewards account to an airline or hotel loyalty account, you can’t transfer those points back to your credit card. Crucially, this includes situations in which the flight or hotel stay is later canceled.

Those points will stay with the airline or hotel rewards program until you redeem them or they expire. Only in extremely rare circumstances, such as a program error, are points returned to the credit card program. Hence, it’s generally advisable to transfer points only when you have a specific and imminent redemption in mind.

Transferable points can also be redeemed through your card issuer’s travel portal, usually at a value of 1 to 1.5 cents per point, against the cost of travel purchases.

Lastly, they can also be redeemed as cash back or as a statement credit toward your credit card balance—however, these last two options tend to confer the least amount of value as redemptions.

Cards that earn transferable points are known as general travel rewards credit cards. These credit cards usually come with a range of travel-related perks as well as travel insurance protection. They also come with annual fees ranging anywhere from $0 to $695. In general, the higher the annual fee, the more perks you can expect the card to offer.

What are the Benefits of Earning Transferable Points?

Picture this. You’ve spent the last year accumulating Hilton points with a co-branded Hilton credit card in preparation for your dream trip only to find out that the Hilton of your dreams isn’t available on your dates. However, with a card that earns transferable points, you’ll never need to fear such a situation occurring.

Transferable points give you maximum flexibility when it comes to award travel. You can look for award flights and hotel stays across multiple partners, enabling you to find the option that makes your points go furthest. If the Hilton you’ve been dreaming about is booked or out of your price range, don’t sweat it—you could check out Marriott or IHG hotels in the same area instead.

Likewise, transferable points enable you to take advantage of partner award charts. Strangely enough, booking an award flight with a partner airline through the loyalty program of a different airline can often save you thousands of points.

This is because while most airlines typically use dynamic pricing for their award flights—which ties the cost in miles to the cash cost of a fare—they often use distance-based award charts for partner awards through their website. 

For instance, let’s say airline X prices an award flight at 150,000 miles during peak season. However, if you book the same award flight with airline X through partner airline Y, it might cost 120,000 miles. That would be because airline Y is using a distance-based partner award chart that’s unaffected by peak and off-peak price fluctuations.

By holding transferable points, you can take advantage of these sweet-spot redemptions without being tied to a single airline or hotel program.

Co-branded Hotel and Airline Credit Cards

Co-branded hotel and airline cards are credit cards co-issued by an airline or a hotel chain and a bank or card issuer. For instance, the British Airways Visa Signature® Card is co-issued by Chase and British Airways.

However, while these cards are co-issued by a bank, they earn points with the respective hotel or airline loyalty program. For example, a British Airways card would earn Avios while a United card would earn MileagePlus miles—not Chase Ultimate Rewards or any other transferable rewards currency.

Co-branded Airline and Hotel Cards vs. Transferable Point-Earning Cards

If you’re dabbling in points and miles, chances are you want to leverage your earnings for discounted hotel stays and flights. 

The question is whether a co-branded credit card or a transferable points-earning card will get you there quicker.

The primary advantage of a co-branded airline or hotel credit card is the cardholder perks that come with it. These are perks that can save you a significant amount of cash and earn you even more rewards with the specific loyalty program.

Take the United Club℠ Infinite Card as an example. Among other benefits, cardholders enjoy the following United-specific perks:

• Complimentary United Club membership
• Free first and second checked bags for you and up to one companion
• 25% discount given as a statement credit for in-flight purchases of food, beverages and Wi-Fi on board United-operated flights and on premium drinks at United Clubs
• Complimentary upgrades on award tickets on select United- and United Express-operated flights for MileagePlus Premier members, subject to availability (up to one companion that is traveling on the same reservation can also qualify for an upgrade)
• 10% discount for United economy award flights on United or United Express within the United States and Canada

This selection of United-specific perks aren’t found on any transferable points-earning credit card and would otherwise require elite status with the United MileagePlus program to receive them. Similarly, a benefit like complimentary United Club membership not only offsets the $525 annual fee each year, but is also highly valuable for United frequent flyers.

Likewise, take a co-branded hotel card such as the Marriott Bonvoy Brilliant® American Express® Card. For an annual fee of $650 (see rates & fees), it offers the following Marriott-specific cardholder perks:

• $100 property credit for qualifying charges at The Ritz-Carlton® or St. Regis® when you book direct using a special rate for a minimum stay of two nights
• Annual free night reward valid for use at hotels participating in Marriott Bonvoy with a maximum redemption value of 85,000 points
• Complimentary Platinum Elite status
• One annual choice benefit after spending $60,000 within a calendar year: five nightly upgrade awards, an additional free night reward with a maximum equivalent redemption value of up to 85,000 points or $1,000 off a bed from any Marriott Bonvoy retail brand 
• 25 complimentary elite night credits issued to your account annually

No transferable points-earning card could compete with such benefits when it comes to Marriott-specific rewards. Platinum Elite status, which is a complimentary card perk, would normally require you to stay 50 nights at Marriott Bonvoy properties while the 25 complimentary elite night credits would require 25 nights stayed. The annual free night reward with a maximum redemption value of 85,000 points is also highly valuable, helping to offset the cost of the annual fee significantly.

However, it’s worth making two points here.

First, these perks are only as valuable as they are useful to you. If you stay in Marriott properties just once or twice a year or rarely fly with United, the respective cards’ perks will be of little value to you. In turn, offsetting the cards’ annual fees will be challenging.

Second, when it comes purely to earning points, you’re almost always better off with a transferable points-earning card. These cards tend to earn more points per dollar spent and have a wider array of bonus spending categories. 

Take the Chase Sapphire Reserve® as an example. It comes with the following bonus spending categories:

• 10X points on hotels (excluding The Edit℠) and car rentals purchased through Chase Travel℠ (after the first $300 is spent on travel purchases annually)
• 10X points on Lyft rides (through March 2025)
• 5X on flights purchased through Chase Travel℠ (after the first $300 is spent on travel purchases annually)
• 3X points on dining at restaurants, including eligible delivery services, takeout, and dining out
• 3X points on all other travel purchases (after the first $300 is spent on travel purchases annually)
• 1X points on all other purchases

If you paid $600 for flights through Chase Travel℠, you’d earn 3,000 Ultimate Rewards points. You could then transfer those points to your United MileagePlus account at a 1:1 ratio, giving you 3,000 United MileagePlus miles. Alternatively, if you used your 3,000 points for a future United award flight booked through Chase Travel℠, you could redeem them at 1.5 cents apiece, making them worth effectively $45.

In contrast, the same $600 spent on United flights charged to the United Club Infinite Card would earn you just 2,400 United MileagePlus miles at 4X miles per point.

Likewise, if you booked a $500 hotel stay through Chase Travel℠ using your Sapphire Reserve Card, you’d earn 5,000 Ultimate Rewards points. You could transfer these to your Marriott account at a 1:1 ratio, giving you 5,000 Marriott Bonvoy points. If you kept them in your Chase account, you could redeem them at 1.5 cents apiece for a Marriott Bonvoy stay booked through Chase Travel℠, making them worth $75.

However, if you used the Marriott Bonvoy Brilliant card to pay for a $500 Marriott hotel stay, you’d earn just 3,000 points—that’s 2,000 points fewer for the exact same purchase.

In both cases, you retain your flexibility when earning Ultimate Rewards points—or any transferable points currency for that matter. Once earned, you can then redeem your points for the most lucrative award ticket offered by any of Chase’s 14 airline and hotel partners rather than with United or Marriott Bonvoy only.

Fixed-Value Credit Cards

The last category of credit cards is those that earn fixed-value rewards. Simply, these cards earn rewards with a redemption value that’s fixed—typically anywhere between 0.7 and 1 cent per point.

These cards stand in contrast to transferable points-earning cards as well as co-branded airline and hotel credit cards whose points can be redeemed through sweet-spot redemptions for varying per-point values.

Fixed-value credit cards can either be cashback cards or points-earning cards.

Fixed-Value Cards vs. Transferable Points-Earning Cards

While fixed-value cards aren’t as lucrative as transferable points-earning cards, they can have their place in certain card strategies.

First, fixed-value cards offer simplicity when it comes to redemptions. Instead of having to learn the ins and outs of award charts, partner alliances and other ways to maximize the value of your transferred points, you can simply redeem your points as a statement credit toward your balance or redeem them for travel purchases through your card issuer’s travel portal.

While squeezing the most value out of your points as possible is ideal, it’s not always necessary. As long as you’re satisfied with the value you’re receiving for your points, it’s a redemption worth making.

Second, there’s a wider variety of fixed-value cards with $0 annual fees. While it’s perfectly possible to offset annual fees as big as $695 per year through frequent card usage and perk maximization, some people aren’t willing to hold a premium card. And if you aren’t interested in transferring your points to travel partners in the first place, you might not feel so limited by the typical offerings of a $0 annual fee card.

Here are some example of fixed-value credit cards with $0 annual fees:

• U.S. Bank Altitude® Go Visa Signature® Card
• Chase Freedom Flex®
• Chase Freedom Unlimited®
• Bank of America® Customized Cash Rewards
• Bank of America® Unlimited Cash Rewards
• Citi Double Cash® Card

Take the U.S. Bank Altitude® Go Visa Signature® Card vs. the American Express® Gold Card as an example. If you spend a significant amount of your income on dining out but have no interest in transferring your points to partners, the U.S. Bank Altitude Go Visa Signature Card is arguably the better option—and for $325 less per year.

The Amex Gold Card costs $325 per year (see rates and fees) to hold and offers the following bonus spending categories:

• 4X points at restaurants worldwide on up to $50,000 per year (1X points thereafter)
• 4X points at U.S supermarkets on up to $25,000 per year (1X points thereafter)
• 3X points on flights booked directly with airlines or through AmexTravel.com
• 2X points on prepaid hotels and other eligible travel purchases booked through AmexTravel.com
• 1X points on all other eligible purchases

In contrast, the U.S. Bank Altitude Go Visa Signature Card comes with the following bonus spending categories for a $0 annual fee:

• 4X points on dining, takeout and restaurant delivery
• 2X points at gas stations and EV charging stations (excludes discount stores/supercenters and wholesale clubs effective Sept. 9)
• 2X points on streaming services and at grocery stores (excludes discount stores/supercenters and wholesale clubs effective Sept. 9)
• 1X points on all other eligible purchases

You could earn the exact same number of points per dollar spent on dining purchases with the U.S. Bank Altitude Go Visa Signature Card without having to pay anything in annual fees.

Lastly, keep in mind that certain fixed-value credit cards can be combined with transferable points-earning cards, enabling you to transfer your earnings on the former cards to the latter cards for redemptions with hotel and airline partners.

For instance, if you simultaneously hold a Chase Sapphire card or the Ink Business Preferred® Credit Card and a Chase Freedom card, you can transfer your cashback earnings to your Sapphire card account. From here, you can transfer these combined earnings to any of Chase’s 14 airline and hotel partners.

For this reason, starting out with a fixed-value card can be a solid option if you’re dipping your toe into the world of points and miles. You can avoid needing to pay an annual fee and start building experience collecting rewards. Then, you can open another credit card later, which you can combine with your fixed-value credit card.

That said, this isn’t the only beginner credit card strategy, but one to keep in mind.

Final Thoughts

No matter if you choose a transferable points-earning card, a co-branded card or a fixed-value card, you’ll receive more rewards on your spending than you would do using cash or a debit card. However, one type of card will be better suited to you than others. 

Determining which card type to focus on begins with analyzing both your spending habits and travel goals.

If you fly frequently with a specific airline or stay often with the same hotel chain, opening a co-branded card with the respective airline or hotel could be a smart move. Alternatively, if you focus on getting the best price regardless of the hotel or airline, a transferable points-earning card gives you maximum flexibility. And if you’re looking for maximum simplicity without fancy perks or are reluctant to pay an annual fee, a fixed-value credit card could be a solid option.