Credit card rewards: Why your points may be losing value and how to fix it

Every year, millions of cardholders let their reward points quietly expire or redeem them for pennies on the dollar. If you're not strategic about how you earn and redeem your points, you could be leaving serious value on the table. Here's the complete breakdown of how credit card rewards actually work, and how to squeeze every bit of value out of yours.

Cash back is simple: spend a dollar, get a percentage back in cash. Points and miles work differently, you earn a set number per dollar spent, and their value depends entirely on how you redeem them. Some cards offer a flat rate on everything you buy, while others give bonus multipliers on specific categories like travel, dining, or groceries. Knowing which type your card uses is the first step to maximizing it.

You can redeem points through statement credits, travel bookings, shopping portals, online retailers, gift cards, or even charity donations. Not all options are created equal, some deliver massive value, while others quietly shortchange you. The method you pick can mean the difference between getting a free flight and getting a $20 gift card for the same number of points.

Buying merchandise directly, shopping at checkout with retailers like Amazon, and trading points for gift cards are the three biggest value-killers. Gift cards especially tend to value your points at less than one cent each, a fraction of what they're actually worth. If you've been redeeming this way, you've likely been shortchanging yourself for years.

Moving your points directly into an airline or hotel loyalty programme, think Emirates, Marriott, or a major hotel chain, is the single most valuable redemption strategy. Done right, you can extract 2 to 3 cents per point or more, especially when booking premium cabin flights or luxury hotel stays. It takes a bit more effort than clicking "redeem," but the payoff is worth it.

If transferring points to partners feels complicated, booking directly through your card issuer's travel portal is a strong alternative. You'll typically get a fixed 1 to 1.5 cents per point — not the highest possible value, but far better than merchandise or gift cards, and much simpler to execute.

Most credit card reward points expire within 2 to 3 years of being earned, though some cards offer points that never expire. Redemption also usually requires hitting a minimum point threshold, and many programs charge a redemption fee, often between Rs. 100 and Rs. 150. Regularly checking your balance and expiration dates is the only way to avoid losing points you've already earned.

Use the right card for the right purchase, take advantage of welcome bonuses and limited-time offers, and never overspend just to chase points. Then, when it's time to redeem, prioritize travel transfers and issuer portals over merchandise and gift cards. Master both sides of the equation, earning and redeeming, and your credit card rewards will finally work as hard as your money does.