The simplest way that credit cards earn you money is by rewarding your spending. Many cards offer flat rates of cash back, such that you earn the same percentage back for any purchase you make. Other cards reward different categories of spending with different rates.
The Blue Cash Everyday, for instance, offers 3 percent back at grocery stores, 2 percent back at gas stations and some U.S. department stores, and 1 percent on all other purchases.
Other cards offer rewards points or miles. Typically 1 point or mile comes out to be worth a penny, so 100 points = $1. But with many cards, you'll be able to choose between various redemption options — cash back, merchandise, travel purchases, donations — and which option you go with can affect the value of the rewards.
Experts tend to agree that, to get the most out of your points when you have so many options to choose from, you have to transfer your points to one of your issuer's travel partners and then scavenge for a great deal on a flight or hotel stay. When you do that, points or miles can be worth as much as 7 cents apiece.