In a recent online survey commissioned by NerdWallet and conducted by The Harris Poll, we asked more than 2,000 U.S. adults what they know about travel credit cards and their features and rewards. Here’s what we learned:

Key findings

• Only 18% of Americans answered that the average value of a travel rewards point/mile is 1 cent, while 45% think it is worth more. Almost 1 in 5 (18%) think a point or mile is worth $1 or more. This tendency to drastically overestimate the value of rewards may leave consumers disappointed and lead them to opt out of opportunities to earn future rewards.
• About 1 in 7 Americans (15%) think they could get three or more round-trip domestic flights, on average, by cashing in a travel credit card sign-up bonus of 50,000 points/miles, while 16% say that’s not enough to purchase any round-trip flights. In actuality, 50,000 points could purchase an average of 1.6 round trip tickets. [1]
• According to a second NerdWallet survey conducted by The Harris Poll [2], of the 71% of Americans planning to take a summer vacation this year, more than three-quarters (78%) plan to use a credit card to fund their getaway(s). On average, they plan on charging $1,467, which could be costly if they carry that debt from month to month rather than pay it off quickly.

Many Americans overestimate the value of a point or mile

The rewards earned on travel credit cards are valuable. With some cards paying rewards rates of 2% or more on spending, using travel cards for everyday expenses can add up to hundreds of dollars a year in rewards. And then there’s the windfall that comes when you earn a sign-up bonus — often tens of thousands of points.

But many Americans wildly overestimate the value of a travel reward point or mile.

The average value of a point or mile is around 1 cent, but fewer than 1 in 5 Americans (18%) know that. Close to half (45%) believe that they’re worth more than 1 cent, with 18% thinking a point or mile is worth $1 or more. Around one-quarter of Americans (26%) are not at all sure about the average value of a point or mile, and an additional 11% say points and miles don’t have any dollar value at all — they’re just offered to encourage consumers to sign up for a credit card.

Cardholders with an inflated sense of point value are bound to be disappointed when a 50,000-point sign-up bonus is worth “only” $500 or so, rather than $2,500 or more. If they decide the rewards aren’t worth it, they may stick their card in a drawer and not use it for the day-to-day transactions that can add up to serious rewards over time.

Younger Americans are less likely to know point value

As with many things, the more exposure you have to a subject, the more you know — and the more likely you are to know what you don’t know.

Younger Americans are generally less likely to know the correct value of a point or mile: Only around 1 in 14 Gen Zers (7%, ages 18-22) know that the average value of a point is 1 cent, compared with 16% of millennials (ages 23-38), 18% of Gen Xers (ages 39-54) and 23% of baby boomers (ages 55-73). At the same time, though, younger generations are generally more confident on the subject: Just 17% of Gen Zers and 18% of millennials say they’re not at all sure about the value of a point or mile, compared with 26% of Gen Xers and 33% of baby boomers.

A typical sign-up bonus can pay for 1.6 round-trip flights

A major perk of travel credit cards is the sign-up bonus — a large number of points or miles you can earn by spending a certain amount on a travel credit card in the first few months after opening your account. But just as they aren’t clear how much a point is worth, many Americans are unsure how many, if any, round-trip flights a sign-up bonus can buy.

Younger generations are more likely than their older counterparts to overestimate the value of a sign-up bonus. More than 1 in 5 Gen Zers and millennials (23% and 21%, respectively) think that a 50,000 points/miles sign-up bonus will pay for three or more round-trip flights, compared with 12% of Gen Xers and 9% of baby boomers.

When we averaged the value of the points on NerdWallet’s best travel credit cards and multiplied it by 50,000 rewards points, we found that the average sign-up bonus is worth about $556. Considering the average cost of a domestic round-trip flight is $343, that means a 50,000 point sign-up bonus could potentially cover 1.6 round-trip flights. [1]

Using the rewards earned from a sign-up bonus in the most valuable way is just as important as getting the bonus in the first place, especially if cardholders want to get those 1.6 round-trip flights. When asked how they would most likely use 50,000 points or miles from a travel rewards credit card, 2 in 5 Americans (40%) say they would use them to purchase flights, while 15% would put them toward non-flight travel expenses. Meanwhile, 13% would use them for something besides travel, and another 13% would choose to save them.

Opting to use travel rewards for things other than travel can be costly, since point redemption values are often lower. Meanwhile, saving rewards for too long can reduce the value of your points because of rewards devaluation, inflation or even expiration.

Americans know that point values vary, but they aren’t sure of the effect of carrying a balance

Almost three-quarters of Americans (73%) know that points or miles can vary in value from card to card. But many are unsure whether carrying a balance on their credit card from month to month affects that value.

Two in 5 Americans (40%) say carrying a balance on a travel rewards card doesn’t affect the value of the rewards, while another 40% say they are not at all sure about this. The reality here is a little complicated. Carrying a balance from month to month on a rewards card doesn’t change the value of a point earned with that card. But carrying a balance typically means paying interest on purchases. (When you pay in full each month, you pay no interest.) And interest charges can quickly outweigh rewards.

Say your card pays rewards worth 2% and charges a 15% annual percentage rate. If you bought something for $100, you’d get points worth $2. But if you carried that debt on your card for just two months, you’d pay about $2.50 in interest. So, technically, rewards value stays the same, but for consumers paying interest, it’s probably costing them more than they’re gaining.

Vacationing Americans will charge an average of $1,467 to their credit card

Almost three-quarters of Americans (71%) say they are planning to go on vacation this summer, and many of them are planning on using credit cards to pay for their trip. Americans planning to travel this summer expect to spend an average of $2,523 for their vacations. About 4 in 5 of Americans planning to go on summer vacations (78%) will use a credit card to fund their travels and expect to charge an average of $1,467. [2]

Need a summer vacation? Save up your cash and book early

Summer is fast approaching, and trip planning is in full swing. According to a May 2019 NerdWallet survey conducted by The Harris Poll [3], almost two-thirds of Americans (65%) plan on traveling for leisure this summer, while about a quarter (24%) aren’t planning on traveling, and 11% aren’t at all sure. Those who aren’t planning a summer getaway are often opting out due to financial considerations.

Americans not traveling this summer point to finances as a major reason why

Of Americans who aren’t planning to travel for leisure this summer, about a third each say they don’t have a summer trip planned because they don’t have the money saved to pay for it (34%) and/or they can’t afford the trip due to their high cost of living (33%). Over a quarter of Americans simply don’t have a desire to take a summer vacation (29%), while others are trying to pay down their debt and don’t want to add to it (21%) or don’t have available paid time off from work (11%).

Around half of Americans say the latest they have booked summer leisure travel is within a month of their departure dates, and it could be costing them

About half of Americans (49%) say the latest they have booked flights or hotels for summer leisure travel is within one month of their trip dates. More than 2 in 5 Americans who have booked flights or hotels within a month of summer leisure travel (42%) did so because the trip was spontaneous.

Among those who have booked flights or hotels for summer leisure travel, millennials (ages 23-38) are more likely than older generations to book flights or hotels within a month of travel (63%, compared to 53% of baby boomers, ages 55-73). About a quarter of these millennials (23% compared to 13% of boomers) say this is because they were waiting for last-minute travel deals from apps they use or websites they follow (23%, vs. 13% of boomers) or waiting for hotels or airlines to share limited-time deals (21%, vs. 13% of boomers).

Booking a trip within a month of travel can be nerve-racking: 15% of Americans who said the latest they have booked flights/hotels for summer leisure travel is within 1 month of their travel date said they were stressed about trying to find flights on the days they wanted to travel. But not all of them feel that way. About 1 in 10 (11%) say they enjoyed the hunt to find flights. However, 1 in 5 (20%) say they had to pay more for airfare than they would have if they booked farther in advance.

What consumers should know

Hoarding travel rewards can cost you: “Stockpiling travel rewards and letting them collect dust in your account is pointless,” says Sara Rathner, NerdWallet’s credit cards expert. “Travel rewards are designed to help you do just that — travel — and only have value when they’re actually used. Hoarding reward points exposes them to potential devaluation or expiration, both of which make it that much harder for you to take your dream trip at a big discount.”

Credit card rewards points and miles can be valuable, but avoid overestimating just how valuable. With close to half of Americans (45%) believing a point or mile is worth more than 1 cent, it might be disappointing to hear that its average value is about 1 cent. But that adds up. On average, a 50,000 point sign-up bonus could buy you 1.6 round-trip tickets, and that doesn’t even take into account all the other rewards your spending will earn you.

For more precise information about how much your rewards are worth, check out NerdWallet’s travel loyalty program reviews.

Rewards are great, but they won’t outweigh the interest you’ll accrue if you don’t pay off your balance: Credit cards are excellent tools, not only for convenience and credit-building, but also for the purchase rewards and travel perks that many offer. But interest can quickly eat up the value of these benefits.

Consider the average amount Americans said they’d charge to a credit card for their summer travel plans — $1,467. [2] If you put that on a credit card and paid it all off before the due date, you’d enjoy whatever rewards you’ve earned without paying interest. But let’s say there’s a minimum payment of $30 a month and you chose to pay that instead. Even with a relatively low interest rate of 15%, you wouldn’t be debt free for 77 months and it would cost you $815 in interest.

“Going into debt to earn travel rewards defeats the purpose of rewards in the first place. Making high-interest credit card payments on expenses you couldn’t afford cuts into the value of the rewards you’ve earned and may end up costing you money in the end,” Rathner says. “If you’re not sure you can afford to pay for a vacation in full, it’s best to plan for a trip the old-fashioned way: Save up cash. It may take longer to afford your vacation, but you’ll be able to relax knowing you didn’t go into debt for a trip.”

Know the risks of booking travel within a month of your departure date: In addition to the risk of not being able to find available flights and hotel rooms on your desired travel dates, it may cost you more to book your trip within a month of your travel dates.