Credit Card Rewards Programs – Different Strokes for Different Folks


Keeping control of your debt accumulation – particularly during the holiday season – is obviously essential, but knowing which credit card rewards programs to take advantage of and those to avoid is also important a good idea.

Credit cards with rewards programs allow users to earn incentives for making purchases with their credit card. 

Points accumulate for each dollar charged on the card, and cardholders can redeem these points for various rewards.  Reward cards usually require better-than-average credit for approval.

FP Dollar SignCash back credit cards allows you to earn cash rewards for making purchases.  The more the card is used, the more cash rewards you receive.  Most cash back cards earn users around 1 percent of total purchases, excluding interest and finance charges.

Some cards offer a higher cash back percentage with increased usage; others offer a higher cash back percentage at select merchants or for particular types of purchases.  Since cash back programs are costly to credit card companies, some of these cards have an annual fee that can vary from $50 to $100.  This type of card is best for people who are faithful about paying off their balances each month.

If used appropriately, a cash back credit card can earn the cardholder a significant amount of money over time.

General reward points credit cards are similar to cash back cards in that cardholders can accumulate points toward a reward structure, which is based on how much the card is used over time.

General reward cards offer cardholders a variety of items to cash points in for: gift cards, electronics, hotel stays, plane tickets, jewelry, pet supplies and more.  Reward programs and promotional offers often change; thoroughly review a card’s terms and conditions before applying.

Hotel or travel points credit cards are specific to hotels and travel with some cards co-branded with hotels.  These credit cards allow you to earn points for all purchases, in addition to bonus points for dollars spent on stays at the respective hotel chain.

You can redeem your points for free nights and upgrades at the co-branded hotel.  There are broader hotel and travel cards with which points can be redeemed for travel, theme park admission, stays at major hotel chains and more.

Since these reward programs can be costly for credit card companies, many come with an annual fee.  If you are not a frequent traveler, the annual fee may negate the benefit of the rewards earned.

Credit Card LadyRetail rewards credit cards are co-branded with a major retailer, such as Disney or  Points are accumulated by making everyday purchases, though cardholders are awarded with double or triple points for making purchases from the co-branded retailer.

Reward points must be redeemed for products or services from that specific retailer.  Since these retail cards tend to have higher interest rates, consumers should try not to carry a balance.

Gas cards with points or rebates come in two types: general and brand-specific.  General cards treat all gas companies equally, while brand-specific cards favor one gas company.

For example, a general gas rebate card may give you 1 percent cash back for general purchases, but rewards you with 5 percent back for buying gas or having auto maintenance done at any company.

In contrast, a gas-company-specific card will give you a 1 or 2 percent rebate for regular purchases, but you will only earn the 5 percent rebate when buying gas at that company’s gas stations.

If you tend to be loyal to a certain gas company, a brand-specific card may benefit you.  But if you tend to just stop at whichever station is closest, you may be better served with a general gas rebate card.  Additionally, it’s important to remember that a gas company may be very popular in one state, but uncommon or nonexistent in other states, making brand-specific credit cards less than ideal for long road trips.

Some general reward credit cards come with an annual fee; most have no annual fee.

Reward cards are best for people who regularly pay off their balances each month.  By minimizing their finance charges, individuals should reap greater benefits from the associated rewards credit card.

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