Whether you’ve been using a credit card for a long time or are just getting your first one, it pays to pay attention to your rewards. Most cards today offer some type of reward service, such as cashback on certain purchases, rewards for spending at certain types of businesses or travel incentives for people on the go.
The key to choosing the right credit card for you is to find one where you can maximize the rewards. In this article, we’ll look at five different types of rewards to consider and what cards typically carry these offers.
- Cash-Back
Most major credit cards offer cash back in some form or fashion. Cashback is when you earn points on purchases that translate into dollars. Earn a certain amount of points, and you get the cash equivalent applied to your account or balance in the next billing cycle. It’s a great way to save money by using your credit card.
The Amazon prime card is one example of a cash-back card. It offers 5% back on purchases from Amazon’s website or Whole Foods Market. All other purchases receive 1% cash back unless they’re included in a promotion. One point equals one dollar, and at the end of your billing cycle, your cashback amount is applied to your Amazon account for use on their website.
- Reward Points
Reward points are another popular credit card system that allows you to redeem points for certain services or products through your customer account with the credit card company. As you spend money, you rack up points that are applied to your account. Many card issuers will create cards that gain more points for certain things like eating out, getting gas, or staying in hotels.
The American Express credit card uses a reward system like this. Customers can earn points as they spend and use points to purchase airline tickets and hotel stays or redeem other deals the company has made with various businesses across the country.
- Gas Cards
Some credit cards are designed specifically to fill up your car. They’re often issued by large gas companies, such as Chevron or Shell, and can only be used at those gas stations. Even some grocery stores will offer gas cards from time to time, such as Albertson’s or Walmart.
These cards function similarly to cash-back cards but with a few caveats. Many offer up to 15 cents off per gallon if you spend a certain amount in one month or billing cycle. Others have introductory promotions such as 8 cents off per gallon for your month. Just be sure to read the stipulations before you plan to reap cash-back rewards.
- Travel Cards
If you’re constantly on the go via air travel, then you might want to look into a travel credit card. These cards are designed to help people who frequently fly maximize rewards on airfare and hotel stays. They usually work on a points-based system, like the American Express card, but you have a variety of options for how to use them.
Some banks, such as Chase, offer travel cards. With these, you can redeem your points with any airline and hotel chain you like. However, if you always travel with the same airline or stay in the same hotel, check for travel cards from that company. They often offer higher rewards but you are limited to using your points only with them.
- Retail Cards
Just like with your gas or travel choices, many of your favorite retail stores also offer their own credit cards. They work much the same as travel cards: You rack up points that are redeemable from that retailer only. This is a great option if you like to do all your shopping in one place and are looking for creative ways to save money.
These are five of the most common types of credit card reward programs. Choose the one that’s best for you!
