Credit Card Rewards 101: Getting the Most Out of Your Credit Card

By Alyssa Schwartz · October 06, 2022 · 7 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Credit Card Rewards 101: Getting the Most Out of Your Credit Card

Groceries, streaming services, transportation — everyday spending can add up, as most people’s monthly credit card statements can attest. And while paying bills is no fun, using a rewards credit card can help make some of those expenditures pay off.

Rewards credit cards pay cardholders back based on a small percentage of what they spend. There are differences in the types of credit card rewards that cardholders can earn and how they can redeem those rewards though. This means it may take a little research — and a basic understanding of how credit card rewards work — to find the best rewards card for your circumstances.

Recommended: Tips for Using a Credit Card Responsibly

Types of Credit Card Rewards

What credit card rewards are, specifically, depends on the type of rewards your specific credit card pays out. The credits earned for making purchases can come in the form of cash back, points, or airline miles.

Cash Back

For cash-back rewards cards, earnings are based on a percentage of the amount charged to the card. The rate of earnings can typically range from 1% to 6%.

Calculating what the rewards rate actually amounts to in the form of money back can be simple for cash rewards: Just apply the cash-back percentage to total spending on the card. For example, if you had a credit card that offered 2% cash back on all purchases, you’d earn $2 back for every $100 you spent using your card.

Some rewards credit cards offer tiered earnings, meaning the percentage back will vary depending on the category of spending or the total amount spent during the year. For others, cardholders will earn a flat rate across all purchases made with the card.

Recommended: What is a Charge Card

Travel Miles

As the name suggests, this type of rewards credit card allows you to earn airline miles in exchange for your spending with the card. You can either get a card affiliated with a specific airline or a more general travel rewards credit card.

It’s possible to earn a fixed rate of miles for every dollar spent, or you might earn more miles through spending in certain categories. For instance, you might earn a mile per every dollar spent. Or, you could get 1 mile per $1 in all purchase categories with the exception of travel costs, where you’d earn 3 miles per dollar spent.

While they’re called miles, these rewards don’t translate to airline miles traveled. Rather, you redeem the miles you’ve earned to help cover the cost of flights or other travel-related expenses, such as hotel stays.

Unlike cash-back rewards, where the value is pretty straightforward, the valuation of airline miles can vary by card, which is something to consider when weighing a preference for credit card miles or cash-back rewards. The value of an airline mile can range from just under 1 cent per mile up to around 2 cents.

Recommended: Can You Buy Crypto With a Credit Card


Another way to earn credit card rewards is by getting a certain number of points for every dollar spent using the card. You can then redeem those points in a variety of ways, such as in the form of cash back, merchandise, travel purchases, gift cards, and even events.

Credit cards that reward cardholders through credit card points will pay out a certain number of points for every dollar spent on the card. They might offer bonus categories, where cardholders can earn more points for every dollar spent in that particular category.

For some cards, earned rewards points may have a set redemption value — for example, every 10,000 points might be worth $100 in flight or merchandise redemptions. However, redemption rates can depend on the type of reward you choose. For instance, there might be different points requirements for flights as opposed to merchandise.

As such, cardholders may have to be more strategic — considering the type of reward they select and the actual cost of their selections — to get the best bang for their buck.

Cash in on up to $300–and 3% cash back for 365 days.¹

Apply and get approved for the SoFi Credit Card. Then open a bank account with qualifying direct deposits. Some things are just better together.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

How to Optimize Credit Card Rewards

It’s clear that the returns you can earn when using a rewards credit card can vary tremendously. But in addition to choosing a rewards card with the best earnings rate, there are other ways to take maximum advantage of credit card rewards.

Find the Best Card Based on Individual Spending Habits

While some rewards cards accrue points on a flat-rate basis — meaning points or miles are awarded at the same rate regardless of what an individual charges to their credit card — others offer higher levels of earning for different spending categories.

Some cards may offer more points per dollar spent on groceries or gas. Other rewards credit cards may provide more miles back when an individual spends on flights or hotels. For people who tend to concentrate spending on specific categories, some cards may offer added value back.

Before signing up for a card, it’s worth taking the time to assess the different types of credit cards you may qualify for.

Max Out Available Promotions

Some rewards credit cards offer higher introductory earning rates, meaning you’ll earn more points than usual for a set amount of time or up to a specific spending threshold. Other promotions may be offered as well, such as greater earnings during a specified time period. Enjoying credit card bonuses like these is key to making the most of credit card rewards.

For instance, you may want to time big-ticket items and other purchases to take advantage of those greater returns. (One important caveat: While offers to earn more rewards certainly seem attractive, it’s wise to ensure that spending is within your budget. That’s because carrying a credit card balance may incur interest and/or penalties that can cancel out the value of any increased earnings — avoiding interest on credit cards requires paying off your balance in full.)

Recommended: How to Avoid Interest On a Credit Card

Be Strategic About Redemptions

Given the variability in the value of rewards points, it’s a good idea to crunch the numbers before redeeming — especially because fluctuating prices and redemption promotions can help to stretch earned rewards further.

For example, although a $200 short-haul flight may not optimize the value of points, booking that same route at the last minute may be considerably more expensive. In such a case, points may yield considerably more value.

Similarly, taking advantage of redemption promotions or redeeming for the highest-value choices can yield greater returns.

Redeeming Credit Card Rewards

Once you’ve racked up some credit card rewards, it’s time to redeem them. Here’s how:

1.    Log into your credit card app or portal. You can usually find your rewards listed somewhere on the main page, though the exact placement depends on your credit card issuer.

2.    Click on your rewards balance. You should be able to see your total available rewards, as well as your options for redemption.

3.    Choose how you want to redeem your rewards. Options for redemption may include a statement credit, a check, merchandise, gift cards, or travel, depending on your specific credit card.

4.    Move ahead with redeeming your rewards. Once you select the option to redeem your rewards, that amount will get deducted from your balance. How long it takes to receive your rewards will depend on how you chose to redeem them.

Do Credit Card Rewards Expire?

It is possible for credit card rewards to expire. However, whether your rewards will expire — and how soon their expiration date will arrive — depends on the type of credit card rewards and your credit card issuer.

Airline miles and hotel points often expire (though not always). Points or cash back earned through your issuer’s program are less likely to expire. In some cases, your rewards might even get automatically credited to your account if you forget to redeem them or haven’t used your account in a while. Check your credit card’s terms and conditions to find out how your credit card works and what the rules are for your credit card rewards.

Recommended: When Are Credit Card Payments Due

The Takeaway

Getting rewards — whether in the form of cash back, points, or travel miles — when you spend money is an attractive proposition. However, when it comes to how to take advantage of credit card rewards, you’ll need to do more than just swipe your card. You’ll want to be strategic about redeeming your points and also make sure to max out any promotions that are available.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1

Take advantage of this offer by applying for a SoFi credit card today.

1Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account, or fractional shares in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
1See Rewards Details at
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store
SoFi Android App, Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender