Apart from their primary function of providing a line of credit, credit cards often come with additional perks and benefits in the form of rewards.
These rewards can enhance your purchasing power and make your everyday expenses more enriching.
In this article, we'll explore:
How credit card rewards work
Some of the types of credit card rewards,
How to decide if credit card rewards are worth it for you
Things to consider when choosing the one that best suits your needs
How do credit card rewards work?
When you use your credit card to make purchases, you earn rewards in the form of points, miles, or cashback. Usually, you earn a certain number of points or a percentage of cash back for every penny you spend.
These rewards build up in your account and can be redeemed for various options. The way you build up points and the process for redeeming them will depend on the credit card issuer and the specific rewards program they offer.
Common credit card rewards include:
Cashback
Cash back rewards are among the most popular types of credit card rewards. With this, you earn a percentage of your spending back as cash. Typically, cash back cards offer a flat rate, such as 1% or 2%, on all purchases. Some cards also have bonus categories, like groceries, gas, or dining, where you can earn higher cash back rates. Cash back rewards are versatile and can be redeemed as a statement credit, direct deposit, or even a check. Learn more about cashback in our guide.
Travel rewards
Travel rewards credit cards are a favorite among frequent travelers. These cards allow you to earn points or miles on your purchases, which can be redeemed for flights, hotel stays, rental cars, or other travel-related expenses. Depending on the card, you may have the flexibility to redeem your rewards with various airlines or hotel chains, giving you more options to find the best deals. Some travel cards also offer additional perks like airport lounge access, travel insurance, or free checked bags, enhancing your travel experience even further.
Points
Points-based credit cards offer a flexible reward system where you accumulate points for every dollar spent. These points can be redeemed for a wide range of rewards, including merchandise, gift cards, experiences, or even charitable donations. Some cards also offer online shopping portals or partnerships with retailers, allowing you to earn bonus points when you shop with specific merchants.
Gas and groceries
These cards provide higher cash back or points earning rates for purchases made at gas stations and supermarkets. By using these cards for your everyday expenses, you can maximize your rewards and offset some of your essential costs. This type of card might be of use to you if you have high grocery or transport costs.
Dining and entertainment
These cards offer rewards or bonus points for spending at restaurants, bars, cafes, and entertainment venues. Some cards even provide exclusive access to pre-sale tickets, VIP experiences, or discounts at popular restaurants. By using a dining and entertainment rewards card, you can turn your leisure activities into valuable rewards.
Hotel and airline
For frequent travelers loyal to a particular airline or hotel chain, co-branded credit cards offer excellent benefits. These cards are affiliated with specific airlines or hotel brands and offer rewards tailored to their loyalty programs. By using these cards for your purchases, you can earn airline miles or hotel points directly, which can be redeemed for flights, hotel stays, upgrades, or other travel-related benefits. Additionally, these cards often come with perks like priority boarding, free checked bags, or complimentary hotel nights.
Are credit card rewards worth it?
Keeping in mind that there’s no guarantee that you’ll be accepted for a credit card - and credit applications can affect your credit score - you really need to be sure the rewards are worth the effort before applying. As well as considering whether you’ll use the rewards enough to justify having the card, think about what you have to pay and make sure you’re not actually losing out. Keep an eye on things like your monthly credit card payment, annual fee and the amount you need to spend in order to earn so you know you’d be getting the most out of your rewards package.
What credit card has the best rewards?
The card with the best rewards for you will depend on what you’re looking for. Decide which types of rewards are most important to you and look into details like how you redeem rewards, how much you’ll earn, and what you’ll have to pay. And don’t forget to read Trustpilot reviews to learn how other people have fared when taking advantage of rewards.
Trustpilot is a review platform that is open to all. The companies and profile pages referenced in this article are provided for informational purposes only and are not recommended, endorsed by, or representative of the views of Trustpilot. The Trustpilot companies linked in this post are expected to abide by Trustpilot’s Guidelines, but have not been reviewed for compliance.
