How to Redeem Credit Card Rewards or Points
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How to Choose the Best Rewards Credit Cards
11 min read
Last Updated: January 9, 2026
Key Takeaways
- Rewards credit cards let you earn a percentage of the amount you spend on purchases back as rewards.
- Common credit card rewards include cash back, miles, and points.
- When choosing a rewards credit card, make sure the annual fee doesn’t exceed your potential rewards.
Rewards credit cards offer an appealing opportunity to get something back from purchases you’re going to make anyway. The best rewards card for you depends on which cards you qualify for, the types of purchases you make, and how much effort you want to put into managing the rewards program.
With Discover®, you earn rewards on all purchases every time you use your card. But each card also has unique benefits that may fit your lifestyle better than others. Exploring the features and requirements of different types of rewards cards may help you find the best credit card for your financial needs and spending habits.
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What is a rewards credit card?
A rewards credit card is a credit card that gives you benefits like cash back or miles when you make eligible purchases. You might think of rewards as an incentive to entice you to use a certain credit card.
Many different credit cards may offer rewards. For example, the Discover it® Student Cash Back credit card is both a student credit card and a cash back card.
Learning about your options may help you maximize rewards for your everyday purchases.
How do credit card rewards work?
Rewards credit cards all work a little differently, but it’s helpful to understand some basics.
Earning credit card rewards
You usually only earn rewards on specific types of purchases that you make with your credit card, like transactions at a gas station or restaurant. You don’t earn rewards on fees or interest charges.
Other types of transactions, including balance transfers and cash advances, may not earn rewards, either. A credit card also might not offer rewards for money orders, gift cards, or lottery tickets.
Redeeming credit card rewards
You might have to review a card’s terms and program rules to learn about the process for redeeming rewards.
Some cards don’t allow you to redeem rewards until you’ve earned a certain amount. But with Discover, you redeem your rewards for cash in any amount.
How to earn rewards
You earn rewards by using your card to pay for eligible purchases. The rewards rate on your credit card determine how much cash back or how many miles you might earn on a specific transaction. Depending on your credit card, you may earn more rewards when you buy a sandwich at a restaurant than you would ordering a t-shirt online, for example.
Most credit card reward programs fall into one of the following three structures.
Fixed-rate rewards
Fixed-rate or flat-rate rewards credit cards offer the same rewards rate on all purchases. For example, you earn 1.5x Miles on every purchase2 you make with the Discover it® Miles card.
A fixed-rate card may be a good choice if you don’t want to keep track of reward categories. Instead, you may earn rewards just by using your credit card any time you shop.
Tiered rewards
With a tiered rewards card, you earn extra rewards on purchases in specific categories or from specific retailers. When you use your card to buy things in the higher tier of rewards categories, you earn rewards at a higher rate, sometimes up to a set limit. All other purchases usually fall into a lower tier and earn rewards at a flat rate.
For example, with the Discover it® Chrome Gas & Restaurant Credit Card, you earn 2% Cashback Bonus® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically. Plus, earn unlimited 1% cash back on all other purchases.3
A tiered-rewards card may increase your earnings if you typically spend a lot of money in higher-tier categories.
Rotating rewards
Rotating rewards cards have a tiered rewards structure where the extra rewards categories change throughout the year. Rotating rewards cards may offer some of the highest bonus rewards rates. However, managing a card with rotating rewards may require a little extra organization and planning, as you have to keep up with changing reward categories if you want to maximize your earnings. You may also have to remember to activate the rewards offers each quarter.
The Discover it® Cash Back Credit Card is an example of a rotating rewards card. It allows you to earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.
Types of credit card rewards
The type of rewards you earn may matter just as much as the rate. Your card may offer cash back, miles, or points, each of which may be used differently.
Cash back rewards
Cash back rewards are straightforward, which may make them easier to use than other types of rewards. As you shop with a cash back card, you earn back cash equal to a percentage of each dollar you spend. Cash back usually has a consistent value, which makes calculating what you earn, simple. With Discover, every $1 you earn in cash back is $1 you can redeem.
Generally, you may redeem your cash back rewards for a statement credit, a gift card, or a donation. Some card issuers also let you transfer your cash reward into your bank account, regardless of the financial institution.
Travel miles
Some travel credit cards offer miles, which may vary in value depending on how you choose to redeem them. In some cases, you may only be able to redeem the miles you earn through specific airlines. Other travel cards offer more flexibility. For example, with a travel card from Discover, you may turn Miles into cash. Or redeem as a statement credit for your travel purchases like airfare, hotels, rideshares, gas stations, restaurants, and more.2
For travel cards, check to see if there are certain travel restrictions, blackout dates, or seat restrictions.
Points rewards
Points-based rewards may be a little more complex to navigate than cash back rewards, because the value of your points may not be consistent.
If a rewards credit card offers points, you may have a few different redemption options, like travel expenses, statement credits, or gift cards. What your points are worth may depend on the redemption option you choose.
Types of rewards credit cards
If you don’t mind limited redemption options, a store credit card from a retailer you are frequent to, may be a good choice.
Did you know
With the Discover it® Miles travel card, 100 Miles = $1 to spend. When you log into your Account Center, you may review all of the rewards you have available to redeem on your card.
Which is the best rewards credit card for you?
As you compare your rewards credit card options, consider how each card aligns with your priorities and spending habits.
Reviewing your spending history may help you narrow down your choices. When and where do you tend to use a credit card instead of cash or a debit card? How much do you usually spend on different types of purchases? If a specific kind of purchase stands out, like groceries or gas, you might want to look for cards with a high rewards rate in those categories.
You might also make note of any large purchases you may need to make in the near future. Will you need a new washing machine or refrigerator soon? Using a rewards card to buy an expensive item may be a good way to get some extra return on that investment.
After narrowing in on the type of card you want and how it may fit your needs, consider other factors that might affect your experience with a rewards credit card.
If you have a limited credit history or you’re working to rebuild your credit score, you may still qualify for a secured credit card. Secured cards require a refundable deposit, which backs your credit limit. Because the deposit reduces the risk to card issuers, secured cards often have fewer eligibility requirements than other credit cards.
The bottom line
With the right credit card in your wallet, you may earn rewards like cash back while you shop at your favorite places and build your credit history. Over time, you may even want to apply for another rewards card that complements the cards you have—for example, if you already earn cash back on gas, you might like to add a travel credit card into the mix. Ultimately, the best rewards credit card for you is the card that helps you accomplish your goals and adds value to your financial life.
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Any pre-approved offers you receive may have offer terms that vary from other offers you see elsewhere. Some card products are not eligible for pre-approval.
Redeem miles: Redemption rates for these options may vary and are subject to change.
2% Cash Back at gas and restaurants: You will earn 2% cash back on your first $1000 in combined purchases at gas stations (stand-alone) and restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at gas stations and restaurants over the quarterly cap, and all other purchases, except as noted below, earn 1% cash back. Gas station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Restaurants located inside of or affiliated with another business, such as hotels or retails stores and establishments classified as a bakery, may not qualify. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Capital One uses merchant category codes to determine if a purchase is in one of the additional cash back categories. This means that sometimes a purchase may not earn additional cash back. For example, some food trucks or food carts may use a merchandise code and restaurants in department stores or hotels may use a merchandise or hotel code instead of a dining code. Certain third-party payment accounts and digital wallet transactions may not earn additional cash back if the technology does not provide sufficient transaction details or a qualifying MCC. Capital One is not responsible for merchant category codes used by merchants. Applies to all rewards: Earnings will apply to net purchases (purchases minus any credits or returns). Cash advances, balance transfers, transfers from Discover or Capital One checking or other deposit accounts, and checks used to access your account are not considered purchases and will not earn rewards. Portions of purchases paid with rewards, transactions that do not comply with our policies and/or applicable laws, or any cash you receive in connection with a purchase at the point of sale through Discover's Cash at Checkout feature will not earn rewards. See Your Rewards Program Terms & Conditions and your online account for more details.
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