Reward Point Credit Cards

There are three main types of credit card rewards. The first two are cash back and miles. The third is what is known as credit card reward points. With these rewards, credit cardholders earn points from financial transactions, including spending thresholds and making everyday purchases.

Most rewards credit cards earn a minimum of one point per dollar spent. Many cards offer more for certain categories of spending, either as a tier or in rotating categories. Common tiers may be tied to purchases made at specific vendors. For example, an airline reward card may offer higher points for purchases made at the airline. You may also receive more points per dollar with gas and grocery purchases than with other retail. The rewards program may offer higher rewards temporarily for a quarter. In a year’s third quarter, you may receive more points for educational expenses.

Credit card rewards points can be redeemed for a number of options, including travel, products, gift cards or cash back. Some credit card issuers allow you to donate to charitable organizations or attend exclusive events. How, and for how much your points are redeemed is determined by each credit card issuer. They may be applied differently to different redemption options. For example, a point may be valued at 1 cent for travel, but half a cent for cash back.

In general, how to redeem credit card rewards point follows the same general principle. You will need to log into your online account and access your credit card issuer’s reward center. There, you should see the points available, redemption options, and how much each option costs. You should consult your credit card issuer to determine if there are any specific actions needed to redeem points correctly.

If your credit card rewards points are taxable is dependent on the type of rewards and how you receive them.

When are credit card rewards points taxable?  There are a few credit card rewards programs where you do not need to incur any charges to earn rewards. If you earned a bonus without spending a certain amount within the first 3 months, the IRS considers this income. The same goes if you receive points without making “normal” purchases. You will receive a 1099 MISC form for these activities. Also, the bonuses don’t have to be converted to cash to be taxable.

When are credit card rewards not taxable? The good news is that most credit card rewards are not taxable. These include cash back, travel miles, accumulated points towards future purchases, and sign up bonuses that you receive with purchase. They’re treated as a discount after purchase.

Yes, you can find no annual fee credit cards with rewards points. For example, Amazon Rewards Signature Credit Card and the Chase Freedom Credit Card. The Chase Freedom Card earns you 5% cash back on your first $1500 in bonus category purchases each quarter. Any other purchases earn 1% cashback.

Airline rewards points can come from several different cards. For example, the Southwest Rapid Rewards® Plus Credit Card offers cardholders:

• 2 points per dollar on all Southwest Airlines purchases;
• 1 point per dollar on everything else;
• a 40,000-point sign-on bonus after spending $1,00 within the first three months.

There is no limit on the amount of points you can earn.

One more airline rewards card is the Platinum Card® from American Express®. It grants:

• 5X Membership Reward points for flights booked directly through airlines or with American Express Travel and prepared hotels purchased through amextravel.com;
• 60,000 reward points after $5,000 in purchases within the first 3 months.

There are a few travel rewards point credit cards that you should consider. For example, Chase Sapphire Preferred Credit Card Reward Program offers 50,000 points for spending $4,000 within the first three months. This is equivalent to $625 through Chase Unlimited Rewards. You can also earn 2x points from flights, hotels and dining-out purchases. Bank of America Premium Rewards Credit Card Rewards Program also offers 50,000 points, equivalent to a $500. To qualify, you must make $3000 worth of purchases within the first 90 days.  Otherwise, you can earn:

• 2 points on travel purchases and dining
• 5 on all other purchases.

The Citi® ThankYou® Preferred Credit Card for College Students Reward Program is a great example. You can earn:

• 2 Citi ThankYou Points for every $1 spent on restaurant dining and entertainment purchases;
• 1 point on everything else;
• 2500 sign up points after spending $500 within 3 months of opening the card.

Some of the cards offered are military credit cards, and these may be limited to customers who have served. The Wounded Warrior Project USAA® Rewards™ Visa Signature® Card allows you to earn 1 point per dollar. This is in addition to the 2500 bonus points with your first purchase.

There are a few credit cards with 50000 bonus points. For example, The British Airways Visa Signature® Credit Card has an impressive sign up bonus. You can earn the 50,000 sign up bonus after $3,000 in purchases made in the first 3 months. The card allows for another 50,000 bonus points to be earned within the first year of opening the account.

The American Express Gold Card offers 20% back in the form of a statement credit during the first 3 months. You can also earn 50,000 after $2,000 worth of eligible purchases during that same period.

Cards that offer 10,000 bonus points do exit. For example, the Amex EveryDay® Credit Card lets you earn 10,000 Membership Rewards Points after making $1000 in purchases within the first 3 months. Likewise, the U.S. Bank FlexPerks® Select+ American Express® Card is another card that offers 10,000 points. This is equivalent to $150 for airfare, hotels, car rental, and other bonuses. To claim this, spend $1,000 on eligible purchases within the first four months of having the card. (Eligible purchases do not count credits and returns.)

It is possible to find 75,000 bonus point credit card. The Hilton Honors™ Card from American Express® is one such card. All you have to do is spend $1000 in purchases over the first three months of card ownership. The Marriott Rewards® Premier Credit Card Reward Program is another one that offers such a large bonus. In order to access the 75,000 bonus points, you must make $3,000 in purchases within 3 months of card opening.

There are two 40,000 Southwest Rewards Program cards: the Southwest Rapid Rewards® Premier Credit Card and the Southwest Rapid Rewards® Plus Credit Card. Both earn 2 points per dollar spent on Southwest Airlines. All other purchases earn 1 point per dollar. You’ll earn 40,000 bonus points if you make $1000 in purchases within the first 3 months. There is no limit on the amount of points you earn.

The Premier card has a $99 annual fee and earns 6,000 bonus points annually on your anniversary. The Plus card’s annual fee is $69, and you receive 3,000 anniversary points.

There are some 60,000 bonus point credit cards available. Per dollar spent, the Citi® ThankYou® Premier Credit Card grants:

• 3 points for travel (including gas, tolls, taxis, and parking);
• 2 points for dining and entertainment;
• 1 point for everything else; and
• 60,000 bonus points if you spend $4,000 within the first 3 months of having the card.

The Platinum Card® from American Express® offers:

• 5X points on travel book through American Express Travel or directly with the airline; and for hotels booked through amextravel.com;
• 60,000 points for $5,000 worth of purchases completed in the first three months of card ownership.