Have you decided that your next credit card should be a rewards card so you can earn a little “something extra” for being a loyal credit card user? Before you run out and apply for a rewards card that looks to be leaps and bounds ahead of the rest, you need to understand something. All rewards points are not created equal.

Wait. What? A rewards point is a rewards point, right? Well, not so much. And before you try to compare something that might not be directly comparable from one credit card company to the next, let’s take a look at why.

Evaluating Rewards Types

The first consideration when comparing rewards earning potential between two different credit cards is the type of reward you’ll get. For most rewards, you’ll work with “points” — either rewards points for things like merchandise and gift cards or frequent flyer points if you have a frequent flyer credit card like the Qantas American Express Classic credit card.

Then you’ll have some rewards cards that let you earn cash back or savings on something like fuel depending on how much you spend. These are the only offers that are somewhat directly comparable because it’s a simple percentage of what you charge to your card. Percentages and dollar amounts don’t vary. But there still might be some inconsistencies depending on what purchases actually count towards your earnings — all purchases versus only the purchases from one retailer for example.

How Much Are Your Points Really Worth?

Let’s get back to the issue of points, because that’s where the main problem lies. One reward point with Card A might be worth quite a bit more (or less) than one reward point with Card B. Why? That’s because each credit card company has its own redemption policy.

So, for example, you might be able to get the same reward with both credit cards — let’s say a $100 gift card to your favourite store. Card A lets you earn 1.5 points per dollar spent and Card B only lets you earn one point per dollar spent. Card A sounds like the better deal on the surface, doesn’t it?

But wait. When you look closer at the terms and reward programme details you learn something interesting. It would “cost” you twice the rewards points for your gift card with Card A’s programme than it would with Card B’s. Why? Because the credit card company set the policies that way — that’s why. So Card B would actually let you earn the gift card faster.

Remember to look beyond the rewards points you can earn per dollar spent. Remember to look beyond the bonus points you get for signing up with some rewards cards. Rather than asking “how long will it take me to earn 10,000 points,” ask yourself how long it will take you to earn the specific reward you want to redeem your points for. Until you look at that information, all you’re really looking at is a marketing gimmick.