Credit Card Rewards Review – What Type to Choose

Friday, March 6th, 2020
Updated: March 6th, 2020
The content is accurate at the time of publication and is subject to change.

When one imagines the perfect credit card, it, as a rule, comes with a worthwhile rewards program. Rewards are one of the main advantages of credit card owning. And no wonder, since we all are so used to the pleasure of receiving bonuses and discounts during shopping. Therefore, everyone wants to have a rewards credit card in their wallet to save as much as possible on daily purchases, travels and more.

Sometimes, earnings may reach hundreds or even thousands of dollars per year. But the main question for someone choosing a rewards credit card is which type of rewards will bring more profit.

Anticipating things, it may be stated that a single correct answer does not exist. It all depends on your needs and goals. But in order to grasp the essence of the issue, let’s consider the main rewards types, as well as their benefits and pitfalls.

  • Cash Back
  • The main advantage of cash back rewards is its clarity. With a cash back credit card, you simply get a certain percentage of your spending posted back to your account. You don’t need to additionally redeem it and it is not converted at some doubtful rate. Typically, you will see real money, similar to other funds you have on your card, which can be spent on anything you want like purchases or payments for services and utility bills. In some cases, you may also choose to receive your cash back as a check in the mail.

    Though, there may be exceptions. For example, the updated Uber Credit Card from Barclays earns Uber Cash instead of standard cash back. The difference is that its use is limited by Uber purchases. So, when choosing a credit card with cash back, it will not be superfluous to familiarize yourself with the terms of accumulating and redeeming rewards.

  • Miles
  • It’s not hard to guess that miles as rewards are offered with travel credit cards. However, not everyone knows there are two types of travel cards presupposing different types of miles: airline credit cards and general travel credit cards.

    Co-branded credit cards are suitable for loyal fans of one certain airline. They give a good rewards rate on that very airline’s purchases and leave aside other spendings. The hidden catch is that airlines may set some restrictions on the miles’ redemption, such as blackout dates or specially allocated award seats. Therefore, even if you accumulate quite a lot of miles, it may be very hard to spend them.

    At the same time, general travel credit cards are designed for those who travel a lot but don’t want to be tied up to a particular airline. Such cards bring miles for all purchases. They then can be spent on any travel-related expenses. What is more, you may be offered additional options. For example, some issuers give you an opportunity of transferring miles to some travel loyalty programs. And some other issuers allow redeeming miles for cash as an electronic deposit to the cardholder’s account and their further spending on any purchases.

  • Points
  • Similar to miles, there are also two types of credit card points: co-branded points and general points. The first work very alike to airline miles. You can have a better rate on particular brand purchases, and then spend the earned points on these brand goods and services.

    With general point rewards cards, you almost always earn at least 1 point per $1 spent on all purchases, but sometimes you can get more on specified categories like dining, groceries, and others. What general points can be redeemed for is determined by the issuer. It can be anything starting from gift cards, travel, shopping, merchandise and finishing with statement credits and cash back. Some issuers allow points’ conversion into miles or their transfer to other rewards programs (but fees may apply). The point value also depends on the card, but more often 1 point equals ¢1 to ¢2. Be careful and don’t forget to check terms of the credit card’s rewards program before applying.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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