There are almost as many different rewards programs are there are credit cards. Rewards programs may offer cash back on purchases, tangible services like airline miles, no interest as an introductory period or low interest, or discounts and special rates on travel and travel amenities. Some credit card reward programs combine these and other benefits.
When shopping for rewards programs, consider your own purchasing habits—if you don't travel much, a reward program that offers airline miles probably won't be too useful. If you do a lot of online shopping, a card that offers deep retail discounts may be more useful than one that offers discounted gasoline.
Keep in mind that deciding between credit card offers should rarely be based on rewards programs alone—consider the card's annual percentage yield (APY), fees, and other terms and conditions carefully before signing up for any card.
Key Takeaways
- Credit card rewards programs can be attractive incentives to sign up for particular cards, but it's important to consider all a card's features, terms, and conditions before signing up.
- Cash back on purchases, which offers a certain percentage back as a credit on your statement, is a popular rewards program.
- Many cards offer introductory interest rates for purchases and/or transferred balances from other cards—these offers are often a 0% interest rate for set periods, usually between 12 and 24 months.
- Travel discounts are another common credit card rewards program. Airline miles, hotel or timeshare credits, and rental car discounts are all common incentives.
- Other cards may offer very specialized rewards programs, like cryptocurrency rewards, gift cards, or discounts at specific retail chains.
Credit Card Rewards Programs
Air Travel Miles
Many credit cards partner with specific airlines and offer more generous air travel milesif you fly with them. There are many airline cards to choose from, such as the American Express Gold Delta SkyMiles card or the Hawaiian Airlines World Elite Mastercard. Some credit cards, such as Chase Sapphire Preferred, allow consumers to earn points that can be applied against travel-related purchases, such as lodging or car rentals.
Tip
Some cards offermore points during introductory periods or to thoseusing self-serve online tools to apply points to purchases.
Cash Back on Purchases and Payments
Different cards offer different amounts of cash back for purchases or payments. The Blue Cash Preferred Card from American Express offers 6% back on groceries up to $6,000 dollars each year and an unlimited 3% cash back on gas.The Citi Double Cash Card offers 1% cash back when purchases are charged to the cardand an additional 1% cash back when those purchases are paid off.
Introductory Rate Period: Purchases and Transfers
Many credit cards offer a low introductory interest rate, often 0%. Cards vary as to whether they charge a different rate on balance transfers andwhether balance transfers are covered by introductory rates. The Discover it card has a 14-month introductory rate of 0% on balance transfers andpurchases.
Discounts or Gift Cards
The Amazon.com Prime Visa Card from Chase offers a promotion that gives a $100 Amazon gift card to Amazon Prime members upon being accepted to the program. Prime members also get5% cash back on Amazon.com purchases; 2% on purchases at gas stations, restaurants, and drugstores; and 1% on other purchases. The My Best Buy credit card offers 5% back on Best Buy purchases and 10% back on the first day of purchases within 14 days of opening the account.
Insurance on Rental Cars and Card Balances
Many, but not all, credit cards offer insurance on rented cars if that card is used to book the rental. It is also necessary to waive the insurance offered by the rental car company. There are some cards, even offered in the same network, that offer varying levels of insurance. It is always advisable to call an individual company and make sure that the card offers insurance before renting a car.
Many credit cards offer otherinsurance that makes payments on behalf of the cardholder in the eventthey are unable to make payments because of loss of income. There have been judicial actions by the Consumer Financial Protection Bureau (CFBP) for unethical practices in the sales and distribution of these insurance policies, including multimillion-dollar fines levied against Discover and Capital One.
Frequently Asked Questions (FAQs)
What Is a Rewards Credit Card?
Any credit card that offers something of value in return each time you use it. The rewards might come in the form of points, miles, or cash back. Points or miles can be exchanged for discounts on travel or other goods and services, and cash back can be received as payment or credited to the card's balance.
Are Credit Card Rewards Worth It?
It depends on how and why you are using the credit card. If you travel a lot, for example, you likely already use a credit card to book flights, hotels, rental cars, and more. In that case, it makes sense to use a card that provides something of value in return. Regardless of the type of rewards program your card offers, the value of those rewards can be wiped out quickly if you carry a balance that requires you to pay interest.
What Is the Best Credit Card Rewards Program?
There is no single correct answer for everyone. If you drive a lot, for example, a card that offers its best rewards for fuel purchases is worth considering. If you spend a lot on groceries and restaurants, there are cards with higher rewards for those specific types of purchases. Think about how you typically use your credit card and shop for a rewards card that best rewards that type of usage.
The Bottom Line
Credit cards with rewards programs can be a good way to save on expenses—but only if the cards are used wisely. Find a card with a rewards program that best matches your spending habits and avoid carrying a balance so you don't erase your savings with expensive interest charges. For example, if you have a card that offers 3% cash back on purchases at grocery stores, using that card allows you to effectively save 3% on grocery expenses as long as you pay the balance each month. Other common types of rewards cards provide cash back, points, or miles for spending on travel, dining out, fuel, and more.
