What Is a Reward Card and How Can It Benefit You?

Reward credit cards offer users an incentive to make purchases with the cards. Many people find them to be an excellent way to get something back for simply shopping. If you want to make the most of a reward card, you need to understand how the card works.

Types of Rewards
Different reward cards offer different types of rewards, and it’s important to choose the one that’s right for your lifestyle. Some rewards cards are especially suited to travelers, for example. The one that’s easiest to understand is the “cash back” type of card. Every time you make a purchase, you earn back a certain amount. After you’ve reached the cash-out threshold, you’re able to request a check or have that money apply toward your balance. Other types of reward cards allow you to earn points that you can then use to purchase goods from a reward store and cards that allow you to earn miles that you can use toward travel.

When choosing a reward card, it’s important to think about whether or not the rewards would be useful for you. For example, everyone can benefit from a simple cash back card. However, the Disney card is really only attractive to people who plan to travel to Disney World or Disneyland. Before signing up for a card, be sure that the rewards are something you want.

Earning Rewards
Program details vary from card to card. Typically, though, you’ll earn at least 1 percent back for every dollar that you spend with the credit card. In most cases, you can earn more rewards when you shop at certain retailers. This might require clicking through a link provided by the credit card, though the extra earnings are sometimes applied automatically. Many cards offer a bonus when you first sign up. If you meet the minimum requirements of the card – usually spending a certain amount within the first two or three months – you can earn a significant amount of rewards.

This is another time when it’s a good idea to thoroughly look at the program before you sign up. If you’ll only earn bonus points when you shop at retailers you wouldn’t normally shop at, it’s not really a good deal. There’s probably another card that’s a better fit for you.

Using Your Rewards
In most cases, you’ll have to log in to use your reward points. From within your account, you should find a link that allows you to do things like request a check or otherwise use your reward points. Talk to customer service if you’re not sure how to proceed.

Before signing up, consider looking at reviews of the credit card. This could tell you whether consumers have found it easy to make use of the rewards they’ve been earning. For instance, many people complain about the difficulty of using travel rewards. Those programs may have blackout dates and limited tickets available for those purchasing with rewards.

Things to Watch Out For
As with any credit card, you’ll have to pay interest on any purchase you make if you don’t pay the balance off in full the next month. Also, some reward cards have an annual fee that you’ll have to pay. If the card has an annual fee, you want to make sure that the rewards you’ll earn exceed the fee you’ll pay.

Making the Most of Your Card
Reward cards work best when you have little to no debt and are able to pay off your balance in full each month. Every time you need to make a purchase, use the reward card in order to earn points. However, you should try to avoid making purchases you can’t really afford. Reward cards work well when you use the card often, but carrying a balance may mean that you’re spending more than you’re earning. One way to keep things in check is to pay for a purchase with the reward card, then immediately make a payment from your checking account.

Reward cards can be a great way to earn some money back on your purchases, but it’s essential to use them the right way. Otherwise, you might be losing money on the deal.