Rewards Credit Card
Want to earn points on every purchase you make? Turn your spendings into benefits for you! Rewards credit cards are the best way to take advantage of your lifestyle with miles, perks and points.
How does a Rewards Credit Card works
We already know what a credit card is. A credit card is a financial product issued by banks, credit unions, online entities, etc., which allows you to borrow money under a line of credit. This money can be used for regular payments, purchases, services, etc.
The difference is that, with a rewards credit card, you get a percentage back of what you spend. This does not mean that you will get bills back, but they will be represented in cash back, points or miles. These accumulated rewards can be redeemed through your credit card issuer reward’s portal.
To understand it better, we recommend seeing rewards as a certain value in cash which can be equivalent to different amounts, depending on the rewards program and the rates established. They are usually expressed as percentages. So for example, if you get 1.5% cash back, it means that you will receive $1.50 back for every $100 you spend on your credit card. When it comes to miles or points, they usually offer “x times” points for every dollar spent.
As we mentioned before, these rewards can be redeemed in multiple things. Some of them are:
♦Travel (flights, hotel stays, car rentals)
Expectations from a Rewards Credit Card
When you are getting a rewards credit card, make sure that you know the details and features that come with it such as:
►Rewards earning: It may be either points, miles or cashback on different categories.
►Sign-up bonus value: You can earn a sign-up bonus of up to $200
►Annual fee: A lot of cards either have no annual fee or waive it the first year. But some of them can be as expensive as $100 or more.
►APR: Rates with these cards are not the lowest in the market but they can go as low as 14.99% (or lower) and as high as 18.99%.
►Benefits: Additionally, most rewards cards offer benefits such as travel accident insurance, travel credits, priority boarding, free checked bags and other valuable cardholder perks.
Types of Rewards Credit Cards
There are many rewards credit cards offered out there. Issuers became very creative and there might be one that fits your lifestyle.
Remember that most rewards credit cards are empowered to be stronger in one specific category, which means that if your credit card gives you travel rewards points, you may not get many other rewards in other types of spending. However, there are some cards that have been designed to include cash back or other benefits in all purchases.
- ⭐Retail Rewards CC
- It basically offers benefits when you make a purchase at a particular retailer. You might only be able to use your card with the affiliated company.
- Many clothing stores such as Forever21, Zara and others offer this credit card, which is only valid within their stores. Department stores like Macy’s also have the same dynamic.
- ⭐Cashback CC
- You can receive cash back on purchases with your rewards card. This is redeemable for statement credit or a deposit in your bank account. It is like getting cash for buying the things you want! Some issuers also allow you to use your cashback towards gift cards and merchandise.
- ⭐Category-specific — Gas, grocery, dining, etc. CC
- If you are a regular consumer of a certain category, this one's for you. The most common categories are restaurants, gas stations, groceries, streaming services and more. These ones usually offer cash back in every purchase but extra benefits in the category of the card. For example, the card may offer 1% cash back on every purchase but you may receive 3% in the specific category of the card.aps for the highest rewards rates.
- ⭐Airline CC
- This one is one of the most common category-specific rewards credit cards. It typically earns miles when you spend on flight with a specific airline. In the future, you may be able to redeem the miles earned for other flights.
- It often also includes free bags, priority boarding, etc.
Pros and Cons of Credit Cards
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