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Rewards Credit Cards Overview

Many credit cards will reward you for the money you spend. There are different reward programs, which include incentives (e.g. cash back) and other rewards given to their clients in return of using the specific issuer.

Here are some of the rewards that you may be given for spending your money with a particular company:

  • Cash back

    This is one of the most desired types of reward due to its universal character. It usually amounts to a percentage of the purchases you make by means of the particular credit card. Instead of a percentage of the purchases, cash backs may come in the form of a specific exact amount once another pre-determined sum is spent. You should also check the way the cash back is redeemed when considering a particular credit card. One way of redemption is through check, whereas another is by a direct credit on your account.

  • Points reward system

    Under this system one is rewarded a specific amount of points for every dollar spent on purchases by using the credit card. In return, the accumulated points can be used for merchandise, gift certificates and travel. Some companies even provide the redemption of the points for cash.

  • Discounts

    Some credit card issuers will provide you with a reward in the form of a discount on goods and services when you use their credit card.

  • Airline miles and hotel points

    Airline miles cards and hotel points cards are popular among business users who travel a lot and families that take a lot of vacations. You will be rewarded airline miles or hotel points when you use your credit card. These miles can in turn be transferred into airline tickets and your hotel points into hotel night stays. The airline and hotels that you select may need different amounts of miles and points.

When you decide on the reward credit card that you are to use, you should consider whether the rewards provided are useful to you. For example, if you don't fly frequently it is nor reasonable to open a credit card that provides airline miles. Additionally, if the credit card issuer provides you with a discount or points that can be used with a particular vendor, you should see whether you really shop at these places.

On the other hand, you should always consider whether the reward you will receive will compensate the cost of holding the credit card. If the annual fee, interest rate or other costs are higher than the provided reward you should move to the next offer.

Before you select the reward credit card you should thoroughly understand its reward structure, the limitations that it may have and the way the reward is redeemed. What really matters is the reasonable use of the credit card and that the cost of holding it doesn't exceed the benefit you get.

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