Charles H. Miller
Credit card rewards programs are more popular than ever, and with so many options out there, it can be hard to pick the one that works best for you. Here, we want to briefly describe three different types of these rewards programs, to help you select the card that works best for you. After all, if you live in the New York City and don’t have a car, you don’t need a card that rewards gas purchases.
Generally speaking, credit card rewards programs enable cardmembers to earn…
1. Points
Credit cards offering points typically assign a certain number of points for dollars spent. It’s often a 1:1 ratio, with extra points being awarded for purchases in certain categories. Once earned, these points can be redeemed for specific rewards such as cash, dining, travel, as well as general rewards like gift cards and cash back. Also, some programs offer conversion to a different kind of points or even airline miles.
Although points may sound complex at first, more often than not, these sort of programs offer the highest rewards, especially in the travel category. Speaking of which, pretty much every major hotel chain and airline has its own credit card that rewards frequent guests/travelers with points or miles. On the other hand, credit card issuers also offer point-earning cards and their points are more general, hence allowing greater flexibility in point redemption and transfer options to other reward programs.
2. Cash back
Cash back credit cards are easier to grasp, offering a certain percentage of money spent back to the user. However, here too, it can be complicated with some cards providing higher percentage back on certain categories and lower percentage on other purchases. Also, there are cards offering a flat 1 or 1.5 percent back on all purchases, as well as those with quarterly rotating categories that offer higher rewards on certain product/service purchases.
It is up to you to select the card that works best for you. As mentioned above, if you live in the NYC and seldom drive, a card rewarding gas purchases is not for you. Similarly, if you spend a lion’s share of your monthly budget on groceries, select the card that rewards those kinds of purchases.
Another thing to know is that cards offering high percentage of cash back usually come with quarterly or annual limits, after which rewards fall back to 1%.
3. Discounts
These sort of credit cards are less popular, but they still offer benefits in the form of discounts on certain products and/or services. Again — if you go for a credit card offering discounts — you should figure out the kind of discount that works best for you.
Final word
It is important to select the card you will actually use, so spend some time figuring out where most of you expenditure goes every month and select the card that will reward those purchases. If you are not sure which card to get, perhaps you are best off going for a cash back card that offers some fixed percentage back on all purchases. Or, you could get multiple cards and use them for different purchases: one for gas and groceries, one for travel and one for everything else. Since we are talking about purchases you would be making anyway, there is really no need to leave any money on the table. So go for it… Start by checking out some rewards cards below.
