Types Of Reward Programs Offered By Credit CardsSeptember 27, 2009 - 12:13 am
When applying for a credit card, it makes sense to pay attention to the credit card rewards on the table in addition to things like interest rate. While it may seem superficial at first, if you have good credit habits, the rewards of a credit card can be a huge reason to choose one card over another. There are a few different options for rewards out there, but with a bit of research, you should be able to find one that fits your spending habits best.
One of the most attractive credit card rewards is cash back. Almost every major credit card company has some sort of cash-back card that’s very popular with consumers. Cash back is usually 1 to 2 percent of your total purchases with the card, though it can be higher or lower. Some companies use “points” to confuse the issue, and send a cash back check after a certain point threshold is reached. Usually these point limits are set very high. It’s important to remember that cash back rewards will only really be helpful if you keep a low balance or pay off your card each month. Cash back cards also tend to have high interest, which will obliterate any savings. With that being said, cash back is probably the best credit card reward for anyone who pays off his or her card each month, as you’ll rapidly accumulate quite a benefit from your credit card. And, of course, it’s the most useful reward since cash is good anywhere. Many cash-back cards give consumers better rewards if they shop at certain stores. For instance, 2 percent cash back at grocery stores, but only 1 percent for other stores. Many will also offer high rates of cash back at specific establishments that have agreements with the creditor.
Shopping rewards are also a common credit card reward. They work similarly to cash back, with a point system implemented, but you’ll get a better reward rate, because you’ll only be able to use your rewards at a certain company. Chase’s Borders card is a good example of this credit card reward ” after a certain number of points are accumulated, the card owner receives gift certificates to Borders related stores. Air miles are another type of reward offered by many credit cards.
It’s important to remember when applying for a credit card that rewards will only be helpful if you pay off your balance each month. Otherwise, you’re unlikely to see much of a benefit. It’s good practice to put all of your regular purchases on a credit card with a high rewards system, and then pay off the card. That way, you’ll profit from your card, and you won’t face the pain of heavy interest charges.