Your Credit Card Is More Valuable Than You Think (If You Have The Right One)

The world of credit card rewards programs can be particularly harrowing to understand, especially for first-time cardholders. Visions of first class upgrades and discounted gift cards scroll through the mind, though few people realize just how much one has to spend to get those rewards.

Want a free iPad? With one card, you'll have to spend more than $60,000. Or how about using points racked up after more than $1,300 in credit card purchases on a single $10 cab ride in New York City? That, too, is an actual reward on one card's program.

According to Brian Kelly, a former Morgan Stanley recruiter who now runs The Points Guy, a blog on credit card rewards programs, simplifying the rewards universe isn't as easy, or helpful, as one would hope.

"It's all about options, in my opinion," Kelly said, adding that cardholders must figure out what's most important to them in terms of rewards — travel, merchandise, and gift card discounts, or simply cash back. "No programs are exactly the same, so look closely and read up on credit card blogs and forums. Once you figure the sweet spots, you can probably get a lot more value out of your points than you thought."

Here's a look at four of the most popular credit cards on the market from various different banks and their reward programs, in addition to Kelly's two favorite cards out there right now in terms of rewards value.

Basic points description: 1% cash back on all credit card purchases and 5% on special quarterly categories.

Discounts/Benefits: Some gift cards will take your points from 1% to 10% in value on each dollar you spend, but according to a Chase Freedom customer service representative, those promotions are limited. Right now, gift cards from Macy's, Kohl's, and Bath & Body Works will net you the most for your points and hard spent money.

Merchandise and travel deals: Really none to speak of here, and the customer service representative could offer no clear reason to use points for merchandise or travel purchase in an effort to get discounts beyond the 1% and 5% cash back offer by the Chase Freedom Ultimate Rewards program.

Sample points purchase: One iPad Air will cost you 63,000 Chase Freedom Points, or $63,000 in credit card purchases. Seeing as the iPad Air starts around $500, and 63,000 points would get you $630 cash back, this sounds like a bad use of those points. Better off taking the cash.

Basic points description: 1% on any purchase, 2% at grocery stores, and 3% on gas in points per dollar spent.

Discounts/Benefits: None found.

Merchandise and travel deals: This really only gives you cash back or statement credit. No miles and no discounts on travel to speak of.

Sample points purchase: Spend $10,000 and you get $100 knocked off statement balance.

Basic points description: 1x points for every dollar spent on any purchase, but not when you redeem for merchandise. Points can be used as cash back or on travel booking or merchandise, even taxi rides.

Discounts/Benefits: It has the ability to convert points into numerous airline frequent flyer programs with around 30 travel partners like Delta and Emirates (new this week) without having to open up a separate mileage card. There's really no limit on the value, and if you're smart about redeeming the miles you can easily get up to 5 cents per point in value, Kelly said.

Merchandise and travel deals: A lot of times merchandise and statement credits can be redeemed for as little as half a cent per point. This is "not a good deal," Kelly said.

Sample points purchase: A taxi ride that took $1,350 worth of points to travel the length of a roughly $10 fare in New York City. Possibly the most expensive taxi ride, considering the purchases necessary to go a few blocks.

Basic points description: 1.5% cash back for every dollar spent on the Quicksilver card with no limit, no rotating categories and no fee. With the Venture card it's 2 miles per dollar spent, but with a $59 annual fee.

Discounts/Benefits: Either card can get you gift cards at a 10% or 20% discount. For example, right now holders of either card can get a $100 gift card from L.L. Bean for $80.

Merchandise and travel deals: Cash, account credit, or gift cards for the Quicksilver card, and 2 miles per dollar with the Venture cards.

Sample points purchase: With the Capital One Venture rewards card, you could spend $25,000 for 50,000 miles and get tickets worth $500 with no blackout dates.

Chase Sapphire Preferred: "This is amazing for travel," Kelly said. The Sapphire allows you to get cash back or transfer points to 10 different travel partners, including United and Hyatt, as well as get gift cards and merchandise.

The card has a $95 annual fee, but users get 40,000 points for signing on the condition that they spend $3,000 in the first three months. "Sometimes you have to go for the card with a fee that's going to give you more options when it comes time to use those points," Kelly said. You also get double points for dining out and travel.

Barclay Arrival: This card has a $89 annual fee and a similar 40,000 points upfront and $3,000 spending minimum in the first three months. But when you redeem points here you get essentially a 2.2% return, which Kelly calls one of the best values on the market. "You're earning two points per dollar across the board," Kelly said. "But when you redeem for travel you get 10% back, so you're getting 2.2%, which is pretty much the highest in across-the-board standard value."