Think of the reward points and miles you earn as a currency. When earning rewards with credit cards, there are basically 4 types of points currency that you can earn:

  • fixed value
  • transferable points
  • co-branded / program specific
  • pure cash-back

Understanding the differences between these currencies is key. Let’s take a closer look at the currencies, and particularly their differences.

Fixed Value Credit Cards

Using fixed value credit cards earns points at a fixed rate. This means you know how much you are going to earn and exactly how much you will get in return. It is very similar to cash-back.

For example, every point earned with your card is worth 1 cent each. These points are earned and used to offset travel expenses. These types of points provide flexibility. Maybe you’ll use them to pay for a flight, maybe to offset baggage fees, or maybe to pay for a flight upgrade.

For instance, if you have 50,000 points, it would give you a $500 credit to offset travel expenses. Many people prefer these flexible points because they don’t enjoy having to deal with the complicated aspects of loyalty programs such as award availability or blackout dates on flights.

However, the title Fixed Rewards doesn’t really apply any longer because many of the best fixed value credit cards now come with the ability to transfer your points to airline  partners.

The best credit cards in this category are from Capital One.

Examples of cards:

Capital One Venture

Capital One Spark


Transferable Points Credit Cards

These types of points allow you to accumulate points into a central account. From this central account you have the flexibility to transfer these points to different loyalty partners. You also have the option of redeeming the points for cash, which you can use towards a purchase. For example, the American Express Membership Rewards program gives you the option to transfer to different airline and hotel programs or redeeming the points at a fixed rate.

Examples of cards:

Chase Sapphire Preferred

American Express Platinum Card


Co-branded Credit Cards

Co-branded credit cards allow you to earn points or miles with a specific airline, hotel or directly with other types of loyalty programs. The value of these types of points and miles are linked to the value assigned by the company they are co-branded with.

For instance, a co-branded credit card with Southwest Airlines allows you to accrue Southwest Rapid Rewards points and then use them on Southwest flights. Southwest assigns value to their points so the value of your points is determined by Southwest.

The downside of these types of points earned on co-branded cards is that now you have to work with the frequent flyer or hotel loyalty programs. These programs may have limitations such as blackout dates, resort fees or lack of award availability.

On the upside, these types of credit cards often come with benefits such as: free checked bags, free hotel nights, priority check-in, lounge access, and companion passes, to name but a few. These types of cards are good to sign up for if you DO use a specific loyalty program. Then you can take advantage of the perks associated with the co-branded card, thereby maximizing the benefits.

Examples of cards: General co-branded credit cards
Top Airline Credit Cards
Top Hotel Credit Cards
Top Specialty Credit Cards


Pure Cash Back

These types of credit cards allow you to earn pure cash back. Your cash-back earnings are either credited directly to your monthly statement or you can receive a check. Cash back is a fixed return. The cash back percent does vary and sometimes certain categories of spend earn higher amounts of cash back. Doing your research and knowing your categories of spend will help you determine which cash-back card will work best.

Best card in this category: Citi Double Cash Back Card



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