There are some credit cards which tend to charge you for only using their product however; there are other cards which are offering incentives on the amount of money you will be spending. Rewards credit cards are available in various forms but, all of these cards provide benefits when you use your card more. These rewards come in the form of numbers or percentage for every dollar spends through the card.
Rewards credit cards
Types of rewards credit cards
Rewards offered on credit cards falls within three categories - cash, miles or points.
These rewards are the easiest to use rewards however; these rewards are not always hard cash. Some programs offer the customers to redeem their cash rewards in the form of credit in their account while other might deposit a cheque in your account or make a direct deposit at the time you want to redeem your reward. In addition to this, cash rewards can be provided in the form of gift cards through which you can shop some of your favorite products.
Miles rewards can also be referred to as travel rewards and can be redeemed in the form of airline tickets. The quantity of miles earned depends upon the type of credit card you have and the number of miles you can purchase for an airline ticket depends upon the flier program. Although, these miles can be converted into programs however, there is a risk of losing points within the conversion process.
These rewards are offered on every dollar spent. For instance, you get one point for one dollar spent. These points can be redeemed as against merchandise in the online shopping mall of the Rewards Credit Cards. In addition to this, these points can also be redeemed for cash, gift cards as well as travelling however, this greatly depends upon the card issuer. Getting reward points redeemed for gift cards, you can save more money as most partner merchants will provide 10% to 20% off on the price of gift cards. Common examples of rewards credit cards are hotel rewards cards and auto rewards cards.
Rewards can be used for many things. Travel rewards are helpful for earning free trips for yourself or family members. Cash rewards are useful for reducing your credit balance along with using these rewards for purchasing holiday trips of birthday gifts. Moreover, the rewards earned can be invested as well. Many rewards credit cards tend to invest the rewards of the customers in their investment account or they can be used to reduce mortgage.
All seems good but, the catch of these cards is that their cost of credit is higher. In addition to this, rewards credit cards typically have higher rate of interest as compared to simple credit cards which eventually means that carrying balance within reward cards can result in losing money.
Furthermore, rewards are not for a lifetime period. Most rewards have an expiration period and they will lapse if not used within that period. Best rewards program does not allow their customers rewards to get expired however; companies can forfeit rewards if the cardholder fails to their credit card bills.